As the U.S. initial public offering market continues to thaw after a deep freeze over the last year, the Nasdaq has launched a new tool to help investors determine where the market is headed over the next six months.
The Nasdaq IPO Pulse Index seeks to show the trend in the market before the actual data changes. The good news is that it’s currently signaling an uptrend through the first half of the year.
“Companies analyzing an initial public offering are always looking for key indicators and metrics to help them plan for the most optimal time to list,” Karen Snow, global head of listings at Nasdaq, said in a statement.
The new index seeks “to empower them with a data-driven forecast of where we believe the listings market will be in the future.”
Don’t miss: Reddit, Shein and Stripe may lead a revived IPO market in 2024
The index is driven by six leading indicators of IPO activity, namely interest-rate expectations, as measured by the fed-funds rate; market volatility, as measured by changes in the VIX index; recent returns, as measured by S&P 500
SPX
price annual growth; valuations, measured using S&P 500 enterprise value to sales ratio annual growth; investor sentiment, measured by the difference between consumers expecting stock prices to rise in the next 12 months or fall in the next 12 months; and the Nasdaq’s proprietary IPO data.
The Nasdaq research team back-tested more than 50 data series to confirm the six indicators demonstrate market shifts.
The index currently stands at a two-year high, suggesting IPO activity will remain strong for the next six months, said Phil Mackintosh, chief economist at Nasdaq.
“We carefully curated the index methodology that blends industry and proprietary Nasdaq data to provide corporates and investors with a pulse of how receptive the markets may be to new issuances in the near-term,” Mackintosh said.
The IPO market has started the year on a better footing than seen for most of last year, with several roughly billion-dollar deals on tap.
This week is expected to see the debut of healthcare-services provider BrightSpring Health Services Inc.
BTSG,
a KKR & Co.
KKR,
-backed company that is aiming to raise up to $959.4 million at a valuation of more than $3.1 billion.
Immunotherapy company CG Oncology
CGON,
is also expected to hit the market this week with a deal that could raise up to $212 million at a valuation of about $970 million. CG Oncology is a late-stage clinical biopharmaceutical company that is developing bladder-cancer drugs, including its lead product candidate, cretostimogene.
On Monday, Finnish sports-brand owner Amer Sports
AS,
set terms for its deal, freeing it up to launch its roadshow. The company is planning to offer 100 million shares priced at $16 to $18 each, to raise up to $1.8 billion. With 484.5 million shares expected to be outstanding once the deal closes, the company would have a valuation of $8.7 billion.
And last week Reuters reported that social-blogging site Reddit is eyeing an IPO in March. The San Francisco-based company is valued at about $10 billion, according to the report, which cited people familiar with the deal.
Chinese fast-fashion platform Shein reportedly filed confidentially for an IPO last year and there are lingering hopes that fintech unicorn Stripe will take the plunge this year too.
See now: Why are Shein’s clothes so cheap? Some shoppers want the answer — and so do a lot of critics.
Last week saw the debut of Kaspi.kz
KSPI,
a Kazakh fintech that already has a London listing. It’s the second deal from a company from Kazakhstan, after financial-services company Freedom Holding listed on the Nasdaq in 2019.
With a valuation of $17.4 billion, Kaspi.kz was the third-largest company to go public in over two years, according to Bill Smith, co-founder and chief executive of Renaissance Capital, a provider of IPO exchange-traded funds and pre-IPO institutional research.
The company is parent to the Kaspi.kz Super App, which offers a range of financial services to customers via a single mobile app.
Renaissance is expecting 120 to 170 deals in 2024 that will raise between $20 billion and $45 billion. In comparison, 108 deals raised $19.4 billion in 2023.
The Renaissance IPO ETF
IPO
has gained 25% over the last 12 months, while the S&P 500
SPX
has gained 21%.
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