After two lackluster weeks, the IPO market is looking to make a comeback, with nine companies expected to raise $1.2 billion in public offerings next week. Four energy companies, three medical and two Chinese internet companies are expected to debut.
“These companies will be facing a harsh IPO market environment,” warns Kathleen Smith, principal at IPO investment advisory firm, Renaissance Capital. “Investors have become more price sensitive because returns on recent IPOs have underperformed the market.”
Since April 10, the last 20 IPOs have all priced below the mid-point of their proposed ranges, according to Renaissance data -- 75% were priced below their expected ranges.
The year was off to a strong start, with the U.S. on track for the best IPO year since 2000. Then after five weeks in a row with IPOs raising at least $1 billion, last week only saw $40 million raised and this week saw $354 million, according to Dealogic.
Companies rose an average of 23% on IPO day in March, but were up only 9% in April. The average first day pop was 17% last year.
Finance has led IPO volume this year, with 15 companies raising $6.5 billion. Technology has seen 19 companies raise $5.2 billion and healthcare has seen 43 IPOs raise $3.1 billion.
The Renaissance Capital ETF (NYSE:IPO), which recently began tracking IPO performance, is down 5% this past month.