Equity capital markets activity continued momentum from late 2023 with >$67 billion raised across IPOs, follow-ons, block trades, and convertible offerings with March being the most active month since November 2021
US equities shine as S&P 500 gains over 10% in Q1, marking its best performance since 2019
Average VIX of 13.7 represents the mildest quarterly average since 3Q 2018
ICR is seeing increased preparation activity for issuers targeting 2H 2024 and 1H 2025 IPO windows
ICR Capital, a leading capital markets advisory firm, today released its First Quarter Equity Capital Markets Update & Outlook report.
The equity capital markets saw heavy issuance activity in the first quarter with IPO, follow-on, block trade and convertible volume up over 100% year-over-year. Aided by a more constructive investor sentiment towards new issuance activity, March ended as the most active month since November 2021, accounting for 43% of the total Q1 volume.
“Optimism towards potential rate cuts later in 2024 combined with the continued strength in the economy propelled equities higher with all major equity indices hitting all-time highs. These favorable market conditions led to a resurgence in equity issuance in Q1,” said Steve Parish, Co-Head of ICR Capital.
Setting the tone from an issuance perspective in Q1 was an active block and follow-on market with $43 billion in gross proceeds. Financial Sponsors took advantage of the favorable market conditions, raising $27 billion in secondary proceeds. The increase in capital markets activity was bolstered by a continuation of strong pricing outcomes.
Most notably, IPO activity increased to 15 IPOs raising over $7 billion in proceeds, more than tripling year-over-year IPO issuance. Notable offerings in Q1 included IPOs for Brightspring Health, Amer Sports, BBB Foods, Astera Labs and Reddit.
“In the context of the recent AI boom, high-profile tech IPOs by Reddit and Astera Labs were well received by investors, demonstrating strong aftermarket trading. This has sparked the attention of other pre-IPO tech companies,” remarked Lee Stettner, Co-Head of ICR Capital.
As strong aftermarket performance and a robust IPO pipeline signal momentum to continue into the spring and summer months, ICR is seeing more companies taking steps in anticipation of commencing IPO processes,” added Lindsay Hyde, Managing Director.
“We expect issuers in technology, healthcare, and consumer sectors to be among the leaders in IPO activity in 2024 and 2025,” noted Ashu Vats, Managing Director.
Another driving force behind the strong ECM activity in Q1, the convertible market saw an explosion of issuance as high interest rates, rising stock prices, and a wall of debt maturities in 2024 and 2025 led to the highest quarterly convertible issuance since Q1 2021. There has been over $20 billion of issuance across 31 deals, increasing 51% year-over-year.
“Q1 has been extremely active and March saw the busiest week of convertible bond issuance since February 2021. Notably, more and more convertible issuers are using independent convertible advisers on their deals, and we have advised on $5bn+ of deals in the last several months,” said Syed Raj Imteaz, Head of Convertible and Equity Derivatives Advisory at ICR Capital. “We expect heightened deal flow in Q2 as well as more companies access the convertible market to manage their interest costs.”
Overall, ICR Capital continues to be optimistic that the recent economic and market trends will allow equity and equity related issuance to remain robust throughout 2024 into 2025. As always, The ICR Capital team is eager to discuss capital markets objectives with corporate management teams and financial investors. Please let us know if you have any questions or if we can be of assistance as you consider IPOs or other equity capital markets transactions.
Click here to download ICR Capital’s 1Q 2024 Equity Capital Markets Update & Outlook report.
About ICR
Established in 1998, ICR partners with public and private companies to execute strategic communications and advisory programs, and manage complex transactions and corporate events to enhance long-term enterprise value and corporate reputation. The firm’s highly-differentiated service model, which pairs capital markets veterans with senior communications professionals, brings deep sector knowledge and relationships to hundreds of clients across more than 20 industry groups. With more than 400 team members, ICR is one of the largest and most experienced independent communications and advisory firms, maintaining offices in New York, Connecticut, Boston, Baltimore, San Jose, London, and Beijing. Learn more at https://icrinc.com/. Follow us on LinkedIn and on X at @ICRPR.
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