Initial public offerings in 2021's first quarter have plunged to their slowest pace in six years as falling stock prices coupled with the Russia-Ukraine war effectively put an end to last year's boom, Renaissance Capital said in a report this week. The market for U.S. IPO stocks has ground to a near halt thus far in March with just two offerings.
There have been 18 IPOs to date for the first quarter. That compares with 84 in the fourth quarter and 101 in the year-ago period. Proceeds raised have plunged 95% to $2.1 billion from the year-ago period. No new IPOs are expected between now and the quarter's end on Thursday.
Private equity firm TPG played the biggest role in the 2021 IPO picture, raising $1 billion and accounting for nearly half of all proceeds. The median deal size fell to $27 million, its lowest level in more than two decades.
Public offerings in the first quarter began at a modest pace. But they tapered off, "as a sell-off in growth stocks crushed returns and the war in Ukraine caused volatility to spike," said Renaissance. Also, Renaissance operates two IPO-based exchange traded funds.
Health Care Most Active IPO Sector
Health care was the most active sector, with eight offerings. The battered tech sector was the second most active, with four. The largest tech deal, Credo Technology Group, raised $200 million.
In addition, Renaissance said, "The near-term outlook for the IPO market is foggy heading into the second quarter, though one thing is clear: recent IPO returns and risk appetite will need to rebound before activity resumes."
However, many private companies are eyeing 2022 IPOs, "with plenty of candidates in the pipeline ready to come to market once conditions improve."
The pipeline for initial public offerings currently has 132 companies on file. They seek to raise a total of nearly $20 billion.
This includes 89 companies in the "active pipeline," described as companies which have filed or updated their IPO plans within the last 90 days. By sector, the active pipeline is led by technology, at 22, followed by health care at 18, and consumer discretionary, at 15.
SPACs Take A Big Hit
The downturn also hit Special Purpose Acquisition Companies. The SPAC market deflated to its lowest level in about two years as 53 offerings raised $8.8 billion. That's a 90% drop in proceeds.
In addition, a "substantial portion" of that $8.8 billion could be returned to shareholders if the SPACs fail to merge with another company," Renaissance said.
There were 42 SPACs that withdrew their filings in the first quarter, more than the past five years combined.
Renaissance separates SPACs from traditional IPOs in its tally.
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