IPO proceeds in the United States surpassed USD10 billion for the third consecutive quarter, signaling the ongoing strength and attractiveness of the IPO market as an avenue to raise capital, according to US IPO Watch – a quarterly and annual analysis of IPOs on US stock exchanges by PwC US.
As of June 27, IPO proceeds in the second quarter reached USD11.9 billion compared to USD5.2 billion in the second quarter of 2010 representing a 129 percent increase in total proceeds raised. The same period also witnessed an increase in IPO volume to 47 IPOs compared to 41 in the second quarter of 2010 and 32 in the first quarter of 2011. May proved to be the most active month, generating nearly half of total offerings for the second quarter, with 22 IPOs yielding USD6.2 billion.
"Larger offerings are being completed and a growing number of companies are entering the pipeline – key factors that have helped contribute to three consecutive quarters where we’ve totaled more than USD10 billion in proceeds," said Henri Leveque, Leader of PwC’s Capital Markets and Accounting Advisory says. "Despite the recent volatility in the capital markets, we are optimistic that the IPO market will continue its resurgence and remain an important source of liquidity and capital for both domestic and foreign companies."
PwC has seen an increase in the number of companies entering the IPO registration process, with another 77 companies entering the IPO pipeline in the second quarter, an increase compared to the first quarter of 2011 when 52 companies filed for IPOs. Only one planned offering was withdrawn in the second quarter of 2011.
Year to date, there have been 79 pricings that generated USD24.3 billion in proceeds, more than double the amount raised for the first half of 2010, when there were 70 IPOs that generated USD9.4 billion. The ongoing strength and recovery of the IPO market in the first half of 2011 puts it on pace to eclipse the full year 2010 proceeds of USD39 billion, according to PwC.
Five offerings, all of which were backed by financial sponsors, generated proceeds of over USD1 billion in the first half of 2011. As a group, these five offerings raised USD10.9 billion, or 45 percent, of total proceeds year to date. Two of these offerings were listed during the second quarter of 2011 – Argentina-based Arcos Dorados Holdings with USD1.2 billion and Netherlands-based Yandex N.V. with USD1.3 billion. These two large offerings helped increase average deal size 100 percent to USD254 million in the second quarter 2011 from USD127 million in the second quarter of 2010.
Financial sponsor-backed IPOs continued their leadership of the US IPO market during the second quarter, contributing 80 percent of total value with USD9.6 billion in proceeds and approximately 66 percent of volume with 31 of the quarter’s 47 IPOs.
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Private equity and venture capital firms are continuing to lead the IPO market, succeeding in generating returns on their investments through new listings. There were a number of high-profile companies backed by financial sponsors that went public in the quarter. Strong interest generated by these companies is an important driver of future financial sponsor-backed deals," added Leveque.
Offerings from non-US companies increased during the second quarter with 14 offerings, up from 10 in the second quarter of 2010. Value jumped significantly to USD4.4 billion, or 37 percent of total value, compared to USD600 million in the second quarter of 2010. China continues to lead among non-US issuers, contributing eight IPOs with proceeds of USD1.4 billion, compared to six IPOs that raised USD300 million over in the same period last year. Other non-US issued IPOs in the second quarter of 2011 came from Greece, France, Australia, Canada, Argentina and the Netherlands.
Technology, Business Services and Financial Services industries dominated the majority of IPO volume and generated nearly 62 percent of total value in the second quarter of 2011.
"The second quarter of 2011 saw resurgence in Technology companies returning to the IPO market, representing 37 percent of total proceeds. There were several high-profile Technology companies completing IPOs in the second quarter, and several others that are currently in the pipeline. With technology representing approximately 25 percent of the companies entering the pipeline in the second quarter, technology will be a key sector in the IPO market in 2011," added Leveque.
