Signs of Revival in IPO Market as Biotech Firms Navigate Volatile Conditions

The IPO market remains challenging due to inflation concerns and market volatility, with a low number of 32 companies listing shares so far this year, raising $6.9 billion, compared to 106 firms in 2021. However, there is a glimmer of hope as some biotech companies have managed to enter the market and one more deal is scheduled for this week. Signs of a potential recovery are evident amidst the cautious optimism.

The initial public offering (IPO) market has faced a tumultuous journey in 2023, with concerns over inflation and market volatility casting a long shadow. According to data from White & Case [1], only 32 companies have managed to list their shares so far this year, raising a combined total of $6.9 billion [2]. This represents a significant decline compared to the 106 companies that went public in 2021, which garnered a staggering $165.5 billion in proceeds.

Despite these challenging circumstances, there are signs of hope. The biotechnology sector, in particular, has shown resilience and continued to contribute to the IPO market. One notable example is Editas Medicine [3], which successfully priced its IPO at $17 per share on March 21, 2023, raising over $240 million. Another biotech company, Fate Therapeutics [4], is scheduled to price its IPO on March 28, 2023.

Moreover, the strong performance of global stock markets in the first quarter of 2023 has provided a positive backdrop for IPO activity. The MSCI index of global stocks surged by more than 7 percent during this period, while the S&P 500 reached new record highs [1]. The US's position as a global magnet for cross-border listings has also remained unscathed, with high-profile companies from other jurisdictions turning to the deep and liquid US stock markets to raise capital.

However, it is essential to note that the road ahead for the IPO market remains challenging. High interest rates and geopolitical tensions continue to pose threats. Moreover, the IPO market recovery may take time, as it is still early in the year and the number of deals remains relatively low compared to previous years.

In conclusion, the IPO market of 2023 has faced a challenging start, but there are reasons for cautious optimism. Biotech companies have shown resilience, and the strong performance of global stock markets has provided a positive backdrop. However, it is essential to remain vigilant and adapt to the evolving market conditions.

References:
[1] White & Case. (2023). Global IPOs 2024: US Stock Markets Poised for a Strong 2024. Retrieved from https://www.whitecase.com/insight-our-thinking/global-ipos-2024-us-stock-markets
[2] Statista. (2023). Total amount raised in U.S. IPOs in 2023. Retrieved from https://www.statista.com/statistics/136871/total-amount-raised-in-us-ipos/
[3] Reuters. (2023, March 21). Editas Medicine raises $240 million in IPO. Retrieved from https://www.reuters.com/business/finance/editas-medicine-prices-ipo-at-usd-17-240-mln-2023-03-21/
[4] Reuters. (2023, March 28). UPDATE 1-Fate Therapeutics prices IPO at $15, raises $200 mln. Retrieved from https://www.reuters.com/business/healthcare-pharmaceuticals/fate-therapeutics-prices-ipo-at-usd-15-raises-200-mln-2023-03-28/