Eleven traditional US IPOs raised a combined $2.0 billion in October, joined by one direct listing. Activity continued to fall well below the historical 10-year average (23 IPOs, $6.4B). The month's listings were led by European shoemaker Birkenstock (BIRK), which raised $1.5 billion (75% of October proceeds) in one of the largest consumer IPOs of the past two decades, before crashing on day one. It was joined by two other IPOs that raised $100+ million, while the remaining eight deals each raised $15 million or less. In a turn from prior months, returns were boosted rather than weighed down by a few volatile small issuers, and October IPOs averaged a 6% return from offer. The larger deals averaged a disappointing -13% loss, trading off alongside the year's other larger IPOs as market conditions weakened amid geopolitical turmoil and pessimism over Fed policy. The Renaissance IPO Index tumbled -6.9%, compared to -2.1% for the S&P 500, with both indices reaching 5-month lows and effectively wiping out the summer rally; the IPO Index has deflated slightly but is still positive for the year (+19.4%), outperforming the S&P 500 (+10.7%). Despite the tougher environment, the IPO pipeline saw a handful of new filings and updates from sizable issuers. Two blank check companies went public, six submitted filings, 12 announced mergers, at least six completed mergers, and terminations and liquidations continued to roll in. The IPO market ended October on less stable footing than it started, and the newest challenges cloud our outlook into the rest of the 4Q. While activity in the pipeline signals potential for a few more sizable deals before year-end, it now looks like any meaningful pickup in activity will wait until 2024.
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