Last Year US IPO Volume $8.6 Billion...Worst in 20 Years
Expectations of Tightening End Boost Major Indexes and IPO Activity
[Asia Economy Reporter Yujin Cho] The U.S. initial public offering (IPO) market, which plunged into the worst recession last year, is breaking its sluggish trend and returning to a recovery phase this year. As expectations for the end of tightening continue and major indices on the New York Stock Exchange rise, the IPO market is also warming up.
According to Bloomberg on the 7th (local time), a total of seven companies, including NextTracker and Enlight Renewable Energy, will go public on the New York Stock Exchange in the second week of February. The total offering amount is $900 million (approximately 1.14 trillion KRW), marking the largest weekly total since October last year. Bloomberg reported, "This is the largest amount since Intel's autonomous driving subsidiary Mobileye went public for $990 million in October last year."
Among the companies going public this week, the solar equipment company NextTracker has the largest offering amount. NextTracker has completed institutional demand forecasting, with an expected offering amount of $535 million. This is the largest scale so far this year based on the offering amount, and there are forecasts that NextTracker's success will serve as a barometer for this year's IPO market. Earlier, biotechnology company Structure Therapeutics, which went public on the 2nd, received market acclaim by soaring 70% from the first day of trading. Structure Therapeutics raised $161 million through this IPO.
The U.S. IPO market enjoyed an unprecedented boom during the pandemic period due to abundant liquidity. SPAC (Special Purpose Acquisition Company) investments and meme culture also contributed to the IPO boom, but as liquidity dried up due to high-intensity tightening measures worldwide, the market reverted to the worst recession last year. The U.S. IPO market size last year was limited to $8.6 billion, marking the lowest level in 20 years.
As the stock market entered a recession, companies that had withdrawn their offerings are expected to make renewed attempts this year. China’s Hesai Group, which failed to go public in the second half of last year, will go public this week. The offering amount is about $171 million. Hesai Group develops and manufactures LiDAR sensors, known as the eyes of autonomous vehicles, using 3D optical sensing and distance measurement technology. Enlight Renewable Energy, listed on the Israeli stock exchange, also plans to relist on the Nasdaq market within this week. Bloomberg predicts that the trend of Chinese companies returning to the New York Stock Exchange, after turning to the Hong Kong and Shanghai stock exchanges due to worsening U.S.-China tensions, will strengthen.
The outlook for this year is optimistic. As expectations for the end of tightening attract funds to the U.S. stock market and major New York indices continue to rise, a favorable wind is blowing in the IPO market as well. Typically, when stock trading volume increases, the IPO market also becomes active. On the New York Stock Exchange (NYSE), the Dow Jones Industrial Average rose 2.1% last month, and the S&P 500 index increased by 5.4%, both recording their best monthly performance since November last year. There are also views that if macro factors such as easing inflation improve further, the pace of IPO market recovery this year could accelerate.
The Wall Street Journal (WSJ) reported, "The IPO market has recently started to show signs of vitality," adding, "With blockbuster IPOs lined up, such as the spin-off relisting of Johnson & Johnson’s consumer health division and the new listing of fintech company Stripe, the mood among underwriters is also turning around."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
