The amount raised from US equity issuance in Q1 2024 increased to US$39.78 billion, the highest quarterly total since Q4 2021 when US$102.93 billion was recorded.
According to S&P Global in its latest M&A Equity Offerings Market Report, even though IPO activity was dismal for the first quarter of 2024, follow-on deals — which accounted for eight of the 10 largest US deals — helped drive the increase in US equity issuance.
Half of the first quarter’s 10 largest equity offerings came from the technology, media, and telecom (TMT) sector. The total value of Q1 2024 equity issuance generated by TMT companies in the US ($7.54 billion) was dwarfed by those in the healthcare sector, which produced $14.62 billion over that timeframe.
The M&A Equity Offerings Market Report notes equity issuance in the US healthcare sector reached a two-year high in total value and number of transactions at 104 for the quarter.
However, the period brought continued stagnation for global equity issuance. The aggregate amount offered globally dropped to the lowest total since the Q1 2023 – resuming the path of steady decline that has marked global dealmaking over the past year.
S&P Global says the slump also depressed transaction numbers in Q1, with total deals falling below 900 for the first time in two years after averaging 978 for the previous three quarters.
Interestingly, while US equity issuance rose, global IPO activity remained lacklustre in Q1, with the report noting the total value of deals plummeted to their lowest recorded over the past four years.
The value of offerings also declined by 6.9% quarter-on-quarter to $23.19 billion, while total transactions fell by 20.7% to 295 compared to Q4 2023.
A continuation of a low number of deals, which has been the case since mid-2022, characterised European IPO activity but there was also an upturn in the total value of issuances.
S&P Global says the $8.12 billion raised from IPOs in the European market marked an improvement both quarter-on-quarter and year-on-year. It was the third-highest total over the past two years.
In the US, the total value of IPOs lagged levels reached in Europe S&P Global says it substantially improved from the previous quarter. The aggregate amount rocketed by 184.9% to $5.67 billion amid a surge in healthcare floats.
However, the number of US listings increased by just one to 25 quarter-on-quarter.
No IPOs in the US exceeded $1 billion in the first quarter, with the healthcare sector accounting for half of the quarter’s 10 largest IPOs. Those five in turn accounted for nearly a third of US first-quarter issuance value.
Of the largest IPOs in the US during the first quarter, only two were for special purpose acquisition companies.
S&P Global says when volatility is reduced and stock prices are rising, investors tend to have more risk appetite to support equity issuance and some issuers took advantage of the dynamics.
Write to Adam Orlando at Mining.com.au
Images: Unsplash & S&P Global
