Year to date, there have been 63 total IPOs, raising $18 billion, which is slightly below IPO issuance during the same time period in 2019 (78 IPOs raising $25.5 billion). In early 2019, IPO activity was slowed by the U.S. federal government shutdown.
In both 2019 and 2020, there was a similar composition of issuance.
- SPAC and Healthcare IPOs led the IPO market.
- Of the 30 IPOs during the 2019 government shutdown, 14 were SPACs and 10 were in the healthcare sector.
- Of the 24 IPOs during the 2020 COVID-19 pandemic, 11 were SPACs and 10 were in the healthcare sector.
- Throughout COVID-19-driven market conditions, healthcare IPOs have priced at the high end of the offer range and on average have traded 57% higher in the aftermarket.
- During the temporary NYSE Trading Floor closure, the NYSE raised $3.5 billion via 11 IPOs.
- On May 15, ADC Therapeutics, the Swiss biotech company, went public on the NYSE, highlighting our continued commitment to the sector.
NYSE Perspective: IPO activity is expected to increase in late-Q2 and Q3, led by the healthcare and enterprise technology sectors. There will likely be an increase in private-equity-backed IPOs, as liquidity and funding needs create more urgency for transactions.
2020 “Follow On” Insight
Year to date, there have been over 370 follow-on offerings, raising nearly $57 billion.
- The number of deals executed is consistent with the trailing five-year average of 373 (January through May 15), as more companies are raising near-term capital tied to economic conditions. Total proceeds in 2020 are below the trailing five-year average of $71 billion.
Year to date, companies are pricing follow-on deals at wider percentage discounts vs. historical levels.
| Year | NYSE Group | Nasdaq Group |
|---|---|---|
| 2015 | -2.7 | -3.4 |
| 2016 | -4.0 | -4.7 |
| 2017 | -3.1 | -5.1 |
| 2018 | -2.8 | -4.6 |
| 2019 | -2.9 | -6.8 |
| 2020 | -4.4 | -8.4 |
NYSE Perspective: Equity markets continue to prove an essential channel to capital and liquidity for our listed companies. The NYSE team is actively engaged with companies and their counsel and bankers to navigate timing and structure of follow-on transactions. While motivations across sector and corporate structure are highly differentiated, the velocity of follow-on offerings will be notable for the remainder of 2020.
Convertible Issuance Rises Sharply
85 converts have priced in 2020, raising over $40 billion compared to 55 raising $18 billion during this same time last year.
- Issuers are on pace to raise over $80 billion in convertible bond proceeds. This would be the highest raise since 2008 ($92 billion).
Issuance has been most active among travel, retail and energy companies. In addition, many stable technology companies are also seeking opportunistic convertible raises.
Dual-Tranche Offerings Provide Flexibility
As mentioned above, many issuers are raising capital through a mix of concurrent equity and convertible bond offerings.
- Of year-to-date common stock and convertible bond offerings, 18 of them were concurrent offerings raising $17.1 billion.
- At the current rate, $68 billion of dual-tranche offerings will be raised in 2020, the most since 2008 ($75 billion).
Consumer services companies have raised the most capital through dual-tranche offerings this year ($7.1 billion.)
While technology companies have raised $11 billion in convertible bond proceeds, only about $900 million was concurrent with a common stock offering, signaling that tech companies are raising money through converts as a more strategic capital infusion versus navigating balance sheet needs.
NYSE Perspective: Companies are reviewing their capital structure to identify near-term funding needs or opportunities. Generally, lower rates provide a lower cost for companies to raise capital via the bond market. As a result of the COVID-19 pandemic, an increasing number of companies have seen credit ratings downgraded to non-investment grade levels. A credit rating downgrade coupled with a decline in equity value makes convertible issuance more attractive to corporates and investors.