Renaissance Capital released its 1Q16 US IPO Market Review. The healthcare sector accounted for all eight IPOs completed, which raised approximately $700 million. This has been the slowest quarter for IPOs in the US since 2009. Seven of these eight IPOs were VC-backed, raising approximately $600 million—the lowest levels since 4Q in 2012. According to Renaissance, the average first-day return for the IPOs was -0.1%, the worse first-day-performance metric since 4Q in 2008.
IPO filings have also gone down from 48 in last year's first quarter to 24 filings in 2016—a new post-JOBS Act low. Renaissance reports, however, that there are 118 companies in the IPO pipeline, which aim to raise $30 billion. 42 of these 118 companies have submitted new/updated filings since January 1, 2016, making up the active pipeline. 18 companies in the active pipeline are healthcare companies, which include 11 companies in the biotech sector.
Renaissance remains optimistic in its outlook of the IPO market. In the report, they expect the market to continue cautiously until an "icebreaker" IPO proves to be a catalyst for the market. They elaborate on this outlook in their IPO Icebreakers 2.0 report. IPO recovery, Renaissance states, will rely on stronger/established tech, consumer and healthcare companies going public, as well as the reconciliation of valuation differences between public and private markets. Renaissance also looks toward the 281 private companies that are poised to go public within the next few years to aid with the recovery of the IPO market.
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