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IPO Insights Q2 2023

Building winning deal stories

Taking a company public can boost its profile and provide much-needed capital resources. But ensuring capital markets readiness requires a keen understanding of the current initial public offering (IPO) market—significant offerings, trends, sectors on the rise, and more.

IPO Insights delivers the latest information and analysis on quarterly IPO activity and performance. Prepared by professionals from the KPMG Capital Markets Readiness and KPMG Private Enterprise practices, this quarterly report is designed to help private markets business leaders prepare their companies to tap into the capital markets.

Green shoots of regrowth?

In the latest quarter, new issuers raised $6.6 billion across 23 IPOs—nearly three times the amount raised in any quarter since the great sell-off at the end of 2021. Deals that raised more than $100 million were rewarded with an average 20 percent return on the quarter.1

While these are all positive signs, they do not indicate a broad-based rally or the return of frothy IPO activity just yet. The deal total was largely due to Johnson & Johnson’s spin-off of Kenvue, which raised $3.8 billion, while deal count remains at historic lows. Just nine offers raised more than $100 million, and new listings as a whole delivered a negative 2.8 percent return on the quarter.2

Observers may look at the quarter and see two different pictures. One is of a market on the cusp of reopening, reinvigorated by the success of a few larger deals across a range of sectors. The other is a market still averse to risk-taking, preferring instead to gravitate toward mature, profitable, and moderately valued companies.

Highlights of 2Q23

  • Twenty three IPOs raised a total of $6.6 billion with nine listings raising more than $100 million each.
  • Investors continued to reward larger, profitable companies and stable spin-offs.
  • PE and VC tested the markets with a range of offers across sectors.
  • SPAC activity remained muted.
  • Industrial and consumer sectors led in proceeds and returns.

While this quarter delivered some encouraging results, I suspect the markets will continue to remain cautious for a few more quarters. What we are seeing is investors starting to build their confidence on issuances with proven track records. Barring any further unforeseen jolts, we should slowly start to see investor appetite for riskier opportunities grow in the coming quarters.

Conor Moore

Head of KPMG Private Enterprise in the Americas

US IPO Activity - Quarterly

US IPO Activity - Quarterly

Source: Renaissance Capital. Data includes IPOs and direct listings with a market cap of at least $50mm. Exclude closed-end funds, unit offerings and SPACs.

Industrial and consumer players trade on profitability

With many investors still looking for the comfort of stability and proven revenue streams, this quarter’s leaderboard was dominated by industrial and consumer spin-offs and cross-listings.

Industrial stocks included the spin-off of Cummins’ profitable Atmus Filtration Technologies and ATS, a Canadian cross-listing with more than $1 billion in annual revenues. Consumer staples were led by the $3.3 billion listing of Kenvue. Consumer discretionary was led by Savers Value Village, a particularly recession-proof business, also with more than $1 billion in annual revenues.

Sectors traditionally dominated by growth stocks either performed poorly or not at all. Just one technology stock came to market—a microcap. And only three healthcare stocks debuted, all of which were biotechs with potential candidate therapies. Just one, venture-backed ACELYRIN, raised significant proceeds and delivered positive returns.

US IPO Returns - Average 2Q 2023 Returns by Sector

US IPO Returns - Average 2Q 2023 Returns by Sector

Source: (X) represents the number of IPOs by sector in 2Q23. Comm. Services defined as companies that fall within the media, retailing, and software and services industries. Consumer Disc. defined as companies that manufacture products and provide services that consumers purchase on a discretionary basis.

VC and PE find that bigger is better

Venture capital (VC) and private equity (PE) players continued to test the markets this quarter with a range of offers. They found that big, stable, profitable companies were rewarded, while new, small, and unprofitable companies were not.

Five of the ten largest deals were backed by VC or PE: ACELYRIN, Savers Value Village, CAVA Group, Kodiak Gas Services, and Fidelis Insurance Holdings. With the exception of Kodiak and Fidelis, which stayed fairly even through the quarter, these offers returned healthy double-digit returns.

VC also brought two smaller offers to market. Azitra, a biotech, raised $8 million before falling 27 percent in the quarter. Interactive Strength, a fitness equipment company, raised $12 million and then swooned 65 percent by the end of the quarter.

US IPO Activity – Venture Capital

US IPO Activity – Venture Capital

Source: Renaissance Capital

US IPO Activity – Private Equity

US IPO Activity – Private Equity

Source: Renaissance Capital

Future trends


Is that it for special-purpose acquisition companies (SPACs)?

This quarter saw six blank-check IPOs on the public markets. Together, they raised less than $1 billion, while de-SPACs fell to their lowest level in three years. Most SPACs have little time left to invest proceeds before they will need to hand them back to investors.

While the SPAC phenomenon remains subdued, we expect to see a “tail end” of de-SPACs continue over the next few quarters as managers finalize marriages. It’s becoming increasingly clear that SPACs aren’t for everybody—though they can still make sense for a company looking to go public quickly.


Looking for the window to open

This quarter offers conflicting data for investors looking for the return of growth stocks to the IPO market.

On one hand, the CAVA Group saw a 99 percent first-day pop, falling only slightly over the quarter to deliver a return of more than 86 percent overall. This fast-casual Mediterranean restaurant chain has yet to report any profits but features a strong growth story and more than 200 existing restaurants across the US.

On the other hand, the sectoral mix suggests it will take more than just a good growth story to woo investors. Technology brought just one microcap to market and healthcare brought just three stocks, two of which were microcaps. The tech stock and one of the microcap healthcare offers lost more than a quarter of their value over the quarter. The other two healthcare offers both delivered double-digit returns.


Outlook for 3Q23

While concerns over the Russia-Ukraine war, US-China geopolitics, inflation, and other economic challenges remain on balance, we see more positive signs than negative ones. Inflation seems to have fallen, which should encourage investors to seek out higher-growth assets. We expect to see a number of sizable companies come to the public markets over the next two quarters.

Source (for all market commentary and data cited on this page): Renaissance Capital US IPO Market 2Q 2023 Quarterly Review

Private companies with a track record of strong profitability—or a very clear path to profitability—should be dusting off their IPO playbooks and recalibrating their view on what it means to be ‘market ready’ in the new public market environment. Don’t underestimate how much investor expectations have changed since the IPO window shut.

Shari Mager

U.S. National Leader, Capital Markets Readiness, KPMG US

How KPMG can help

Understanding key trends and investor expectations is critical to preparing for an IPO. Investment narratives matter. They cut through the deluge of data and help companies sift real windows of opportunity from market noise. And the most compelling deal stories come from insights about a company’s unique mix of valuation drivers. Sector. Markets. Customers. Portfolio mix. Capital structure.

At KPMG, our professionals offer a range of services specifically designed to help privately owned companies—venture-backed or otherwise—navigate each stage of their IPO journey. We use our deep knowledge of markets and the ecosystem to help entrepreneurial ventures simplify the complex challenges of going public, while helping ensure they meet their diverse regulatory, compliance, and reporting requirements.

Working with KPMG, you gain access to trusted advisers who share your entrepreneurial mindset. We can help you understand and improve the factors that drive maximum deal value for your offering.

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Meet our team

Image of Shari Mager
Shari Mager
Partner, U.S. National Leader, Capital Markets Readiness, KPMG US
Image of Conor Moore
Conor Moore
Global Head of KPMG Private Enterprise, KPMG International, and Head of KPMG Private Enterprise, KPMG US

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