The S&P 500 rose 6.2% in January as investors digested further signals that inflation may have peaked and a possible end to interest rate hikes may be in sight. Driven in part by an apparent short squeeze in tech stocks, the Nasdaq rose 10.7% in January, though the sector remains largely below its 2021 peak and has yet to see any substantial ECM activity. Broader issuance remained light as well despite the stock rally and lower market volatility, coming in slightly below the 2022 monthly average.

 

Skyward Specialty Insurance (SKWD) was the first traditional US IPO of the new year, with the deal upsizing to $154.4m post-shoe and pricing at the midpoint of the $14-$16 range. Shares traded up 27.3% on the first day of trading (1/13) and closed the month up 23.4%. TXO Energy Partners (TXO) priced a $100m IPO at the midpoint of the $19-$21 range and saw shares rise 10% day-one (1/27).

 

Notable S-1 filings this month included Johnson & Johnson’s (JNJ) consumer product brand Kenvue, solar energy tech provider Nextracker, Enlight Renewable Energy, Mineralys Therapeutics, and Structure Therapeutics.

 

There was action on the ADR/ADS front, with companies looking to come to market in the US following a rally sparked by reopening policies in China and geopolitical/regulatory progress on audits. QuantaSing (QSG) priced a $40.6m IPO at the midpoint of the $11.50-13.50 range and shares were flat day-one (1/25). In the second half of the month, Hesai Group (HSAI) and New Ruipeng Pet Group (RPET) also filed to go public on the Nasdaq and NYSE respectively.

 

Follow-Ons continued to account for the bulk of overall activity, with 43 deals raising $6.9bn in equity capital. The average discount on FOs raising north of $50m was 6.0% and performance was strong, with these deals averaging a 3.7% gain day-one. Healthcare was once again the leading sector, comprising of 28% of FO issuance.

 

Notable private market activity included Stripe reportedly closing in on a $2.5bn round which may value the payments provider between $55bn-$60bn. The company last raised capital at a $95bn valuation in March 2021 and is the latest high profile unicorn to raise capital in a down round. This news comes shortly after the company was reported to have trimmed its internal valuation to $63bn and told employees it would make its decision on its plans to go public this year.

 

Though ECM activity came in low to start the year, we are encouraged by the number of private companies filing S-1’s, as well as a pickup in European IPO activity. We look to the engagement and performance of these IPOs to serve as a barometer for global investor appetite for new issues.