IPOs: ‘Massive oversupply of activity' slows amid Fed uncertainty, strategist says
Added 07-19-22 04:04:02pm EST - “IPO activity hav dramatically declined since the beginning of 2022, effectively ending the record-breaking public funding streak seen just a year ago. So far in Q2, only 42 U.S companies went public, according to statistics released…” - News.yahoo.com
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IPO activity has dramatically declined since the beginning of 2022, effectively ending the record-breaking public funding streak seen just a year ago.
So far in Q2, only 42 U.S companies went public, according to statistics released by Renaissance Capital, a Connecticut-based IPO management and research firm. Analysts see similar patterns across the board amid interest rate hikes and fears of a recession.
“I think that the leading cause is we saw a massive oversupply of activity last year. You had 400 traditional IPOs, along with 600 SPACs, go public. It was a record year, both in terms of volume and total proceeds raised in the IPO market,” Steve Maletzky, managing director and head of capital markets at William Blair, told Yahoo Finance Live (video above).
Of the nearly 1,000 traditional and SPAC new listings in 2021, approximately 400 U.S. debuts raised combined equity of nearly $140 billion. Last year’s momentum shattered previous IPO records in the 1990s during the dot com bubble.
However, the recent economic headwind, evident in the declining earnings from public companies and some big banks, has tumbled tech valuations and investors’ appetite. These factors, exacerbated by the Russian-Ukraine war and global inflation, have caused a "pullback in offerings" as uncertainty spreads, said Maletzky:
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