Equity issuance was limited this month due to continued regional bank turmoil and impending Q1 earnings, resulting in total ECM volume of only $3.1bn, lower than any other monthly total in 2022. While yearly inflation has decreased sequentially in recent months, it remains high at 5%, and uncertainty persists regarding the Fed's plans for rate hikes/cuts.

 

JNJ's highly anticipated IPO of its consumer health segment, Kenvue (KVUE), launched last week and is scheduled to price in the first week of May. If valued at the midpoint of the $20-$23 range, Kenvue would have a market cap of $40bn, with JNJ receiving roughly $3.2bn in proceeds in the largest IPO since Rivian’s $11.9bn deal in November 2021. This IPO comes after a sluggish start to 2022, with US IPO volume reaching just $2.7bn through April.

 

Fidelis Insurance Holdings, a provider of specialty insurance and property reinsurance, filed for an IPO, as did Acelyrin in Biotech. These are the latest additions to the IPO pipeline looking to potentially test the market in the near term.

 

Follow-on issuance decreased by 57% vs. April 2022, amounting to only $2.9bn. While spreads remain tight for deals worth >$50m with an average discount of 3.8%, one-day performance recorded an average gain of 4.7%. Healthcare and utilities were the most active sectors, accounting for 70% of follow-on issuance. The largest registered deal was a $575m marketed follow-on of PCVX, which was priced at a 7% discount on April 18th and traded up 11.7% on day one.

 

In private capital markets, VinFast received commitments for an additional $2.5bn in capital to help the EV maker accelerate expansion across North America and Europe. What this means for its planned 2023 IPO remains to be determined, though reports suggest this may push the timeline out into next year.

 

Q1 earnings thus far have been better than expected, with relative strength in mega cap tech stocks drawing significant investor attention. With the S&P up 8.6% YTD, the Nasdaq up 16.6% YTD, and the VIX at a relatively low level, we view the environment for issuance to be attractive.