The IPO market had the biggest January on our records (25+ years) by IPO proceeds and deal count . The month's 18 IPOs raised $9.2 billion, or 4.5x more proceeds than the average January over the past decade.
January is typically a slow month, raising 50% less proceeds than the year's average. Not this year: January 2018 raised more capital than any month since September 2014, when Alibaba went public.
Sign up for a free trial of our premium platform, IPO Pro , to drill down into January's IPO activity. Access enhanced profiles, a detailed IPO calendar, and the full IPO pipeline. Track your favorite deals, and get IPO email alerts to your inbox.
A receptive IPO market
Broadly speaking, the market is ripe for new issuance. Volatility is still low, markets are near all-time highs, and recent IPOs have performed well. As we noted in our Annual Review , companies pushed back IPOs in 2017, creating the current build-up in supply.
Three IPOs raise nearly $5 billion
Several large issuers came public in January, including three billion-dollar IPOs ( PagSeguro , ADT , VICI Properties ). An SEC rule change in mid-2017 allowed large companies to silently prepare their IPOs in the 2H17, process the new tax bill in December, and pursue offerings with greater flexibility this past month.
Emerging themes: Biotech, energy, REITs, LatAm, LBOs
Biotechs were well-received - particularly Menlo Therapeutics (MNLO,), ARMO BioSciences ( ARMO ) and Solid Biosciences ( SLDB ) - likely helped by heavy insider buying and a series of high-profile acquisitions in the space (e.g. JUNO, ABLX). A number of energy services IPOs launched (LBRT, NINE), with rising energy prices promising a pick-up in E&P capex. Three large REITs priced this month (COLD, VICI, ILPT), potentially getting out ahead of future rate hikes. Two South American companies went public in the US ( PAGS ) and CAAP), with several more Argentine deals in the pipeline. Four of the month's offerings were LBOs (COLD, GTES, ADT, AGS), which may benefit from reducing debt burdens under the new tax law.
January IPOs average a 28% gain
The average IPO popped 22% on day one, and finished the month with a 28% return. Of the 13 that traded, 10 (77%) finished above issue. The month's top three IPOs were biotechs, including top performer Menlo Therapeutics (+117% from IPO at 1/31). Liberty Oilfield Services ( LBRT ) had the best first-day pop for an energy IPO since 2014. PagSeguro had one of the best first-day pops for a billion-dollar IPO in the past decade ( #5 of 46 ), while ADT had one of the worst (#44 of 46).
SPAC surge continues: Five deals raise $1 billion
Five blank check companies raised $1.0 billion in January. That continues the 2017 surge in SPAC activity, where 32 deals raised $8.7 billion, the most since 2007.
Tech is next
Technology IPOs have stayed on the sidelines so far, but that should change in February and March as companies finalize their 2017 full-year numbers. Our 2018 Outlook highlights the most likely names from our Private Company Watchlist - only available for clients of our institutional research portal, IPO Intelligence .
The article January IPOs raise $9 billion in record-breaking start to 2018
originally appeared on IPO investment manager Renaissance Capital's web site renaissancecapital.com. Investment Disclosure:
The information and opinions expressed herein were prepared by Renaissance Capital's research analysts and do not constitute an offer to buy or sell any security. Renaissance Capital, the Renaissance IPO ETF (symbol: IPO)
or the Global IPO Fund (symbol: IPOSX)
, may have investments in securities of companies mentioned.