It was a slow week in the IPO market, which, besides the usual February lull as companies update financial statements for year-end, should be expected in a week shortened by President’s Day.
As the IPO market remains nearly in standstill, private money continues to flow and M&A activity provides another exit for private companies. Just one company, Yangtze River Development (YERR), filed this week. Blank check company Silver Run Acquisition (SRAQU), which filed initially in late January, filed an amended prospectus and set its pricing date to next Tuesday, February 23.
Last week, 81% of 2015 IPOs were trading below issue. That improved this week to 75% of 2015 offerings, one small improvement in an otherwise frosty IPO environment.
Tough market conditions frequently draw comparisons to the downturn in 2008, and the IPO market is certainly not exempt. Companies that came public in 2015 are trading similarly now to how the 2008 IPO class traded at the end of 2008.
| 2008 IPO performance at year-end compared to 2015 IPO performance through this week | ||
| Performance Metric | 2008 IPOs at year-end | 2015 IPOs through this week |
| Number of IPOs |
43 | 170 |
| Average Total Return |
-27% | -22% |
| Average Aftermarket Return |
-29% | -31% |
| Percent trading below issue | 84% | 74% |
IPO Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is down 14% year-to-date, compared to -6% for the S&P 500. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Synchrony Financial (SYF), Alibaba (BABA) and Citizens Financial Group (CFG). The Renaissance International IPO Index is down 11% year-to-date, compared to -8% for ACWX. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF Holdings include NN Group and Recruit Holdings.
