Corporate Financing Analysis - US IPO Market Continuing To Break New Records, But Downturn Awaits - 20 NOV 2017
In a bumper year for floats in the US, the busiest week of 2017 to-date, followed by expectations of an even more active week to follow, are the surest signs yet that the IPO market is about to run out of steam. Indeed, we see the rush of deals as an indication that firms hoping to complete a public market listing have been moving forward their timelines to do so before the window of opportunity closes tighter when the drawback in equities begins ( see ' US IPO Market On Fire As Drop Draws Ever Closer ' , October 25 2017). For the time being, however, the benchmark S&P 500 index is enjoying its lofty status, with Bloomberg data as of the time of writing on November 14 showing that US stocks are still up by 15.45% in the y-t-d period and by 21.87% y-o-y.
2017's Busiest Week
During the week ending November 10, ten companies successfully went public on US exchanges - raising a combined USD1.6bn in the process. This now bring the y-t-d tally for floats in the US to a level of USD33.2bn raised across 141 deals - according to Renaissance Capital data. We highlight that the week ranked as the most active of 2017 in terms of deal volume. Texas community lender CBTX took the top spot in the aftermarket performance rankings, with a 10% debut pop for its USD62mn listing. This ranks as well above the 3.6% first-day return average for the week but is still below the long term historical average of 13%. In our view, the modest first day returns likely benefit aftermarket returns, which averaged 0.9% this week. Over the past 90 days, the average aftermarket return is now flat at 0% - as shown by Renaissance Capital research.
|The Last Rush|
|US IPO Activity by Deal Value, USDbn|
|Source: Renaissance Capital|