IPOs: Off to a Poor Start as 2023 Kicks Off

If the old saw is true that January determines how the investing year will fare, 2023 doesn’t look good for initial public offerings. The count thus far this year is just 15 offerings filed, down almost a third versus this point in 2022 (20 launched then), according to Renaissance Capital.

This is not good news for private equity firms seeking exit opportunities for their portfolio companies—and by extension, for the asset allocators who have chosen PE as a prime holding. Last year was pretty lousy for IPOs, with 71 filers raising almost $8 billion. Compare that with record-setting 2021, when the stock market was on fire: 397 offerings and $142 billion garnered, per Renaissance.

Not a single IPO last year raised $1 billion, a trend that carries over to 2023, FactSet figures show. The largest offering in 2022 was Intel’s spinoff of MobilEye, a self-driving car business, which bagged just less than $1 billion.

This year, the biggest IPO in the pipeline is TXO Energy Partners LP, an oil and gas producer, which aims to get $100 million when it goes public on Friday, Morningstar researchers say. The next by size is QuantaSing Group Limited, which holds China’s largest adult online learning service provider; it aims to sell for $41 million. The rest are below $13 million. These are all included in the 15 filings, year to date.

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Forecasts of a possible recession this year are not helping public offerings. What could turn things around? A stock market increase, for a change. At this early stage, the S&P 500 is up 4.6% in 2023, after a tiny dip Tuesday. The index lost 19% in 2022.

Tags: initial public offering, IPO, Public Equity

The British Steel Pension Scheme’s has secured a third buy-in policy with Legal & General Group plc, under which approximately £2 billion ($2.5 billion), or 30% of its liabilities, were insured. The move increases the total amount insured to approximately 60%, and Tata Steel Limited announced it expects to complete a buy-in for the remaining 40% during the first half of the year.

The BSPS, one of the largest pension plans in the U.K., is an independent fund managed by its own board of trustees. It has more than 69,000 members and approximately £9.9 billion in assets. The plan entered assessment in 2018 under U.K. pension lifeboat the Pension Protection Fund after the restructuring of Tata Steel UK Limited. PPF assessment occurs when the sponsoring employer of an eligible pension plan becomes insolvent.

In July 2022, Legal and General Investment Management was appointed to manage the combined assets of the BSPS defined benefit plan. The BSPS trustee previously entered into buy-in policies with Legal & General in May 2022 and November of 2021, insuring 5% and 25% of liabilities, respectively, for a total of approximately £2.8 billion.

“With full insurance buy-in completed, the scheme and, in turn, Tata Steel UK, will be fully covered against any funding shortfalls arising from changes in underlying conditions or market variables in future,” Tata Steel’s release said.

As of September 30, 2022, the British Steel pension represented a net surplus of approximately £1.5 billion on its balance sheet, according to the announcement. Also, the company, said that in September and October, when the U.K. experienced unprecedented interest rate volatility, the funding level for the British Steel pension actually improved, and it had sufficient collateral to maintain its interest rate and inflation hedges.

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“Overall, the scheme continues to have a healthy surplus, and its risk position has improved since its restructuring in 2018, and quarter-on-quarter,” the Tata release said.