US IPO Issuance in February the Most Since November 2021, Led by Solar Tracker Nextracker

The IPO market had ground to a halt since September 2022. IPO interest was the worst in decades. A combination of hope fora new year and pent-up deals saw ten IPOs raise a combined $1.5 billion in February, which roughly in line with the 10-year median (10 IPOs, $1.3B). Significantly five issuers raised over $100 million, the most since November 2021. The biggest was integrated solar tracker and software solutions company Nextracker (NXT) raised $638 million at a $3.5 billion market cap in the year’s largest US IPO to date.  Enlight Renewable Energy (ENLT) priced below its last close on the TASE to raise $252 million at a $2.1 billion market cap.

Chinese lidar developer Hesai Group (HSAI) upsized and priced at the high end to raise $190 million at a $2.6 billion market cap. Cardiorenal disease biotech Minerals Therapeutics (MLYS) upsized and priced at the high end to raise $192 million at a $645 million market cap. 

IPO Issuance Pipeline

Outside those five the rest of the month’s IPOs were micro-caps. Many of these had been stop start affairs for months after being delayed several times before pricing. This was a combination of a horrid bear market for fresh deals and regulators requiring extra scrutiny of small deals after the well documented pump and dumps of 1000+ deals out of China last year.

February saw activity in the first few weeks, dropping off as companies paused to wait for year-end financials. February IPOs averaged a -13% return from offer, though the group of $100mm+ deals averaged a solid 19% return, with three of the five finishing above issue. This has been the pattern with the smaller deals, hence the extra regulatory scrutiny.

The Renaissance IPO Index seesawed after an explosive start to the year, closing out with a -1% loss compared to the S&P 500’s -2%, though it ended the month on a positive trajectory.

Renaissance Capital

There are hopes, though high yields forced by the Federal Reserve are hampering, for more activity in the year ahead. We saw one large addition in the pipeline, Cummins spin-off Atmus Filtration Technologies (ATMU), which filed for an estimated $350 million IPO. Five blank checks raised a combined $400 million, the most since last May, and eight companies listed via SPAC merger.

Five blank checks joined the pipeline, breaking the longest filing drought in more than five years. Frac sand miner Atlas Energy Solutions (AESI) launched its $387 million IPO at month-end.

February 2023 IPO and SPAC Weekly Trackers

Source: TradersCommunity, Renaissance Capital

From The TradersCommunity Research Desk