2014 IPOs Raise Highest Proceeds Since 2000, According to PwC's Deals Practice

288 companies enter public markets in 2014; most active volume in seven years

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Dec 09, 2014, 09:00 ET

NEW YORK, Dec. 9, 2014 /PRNewswire/ -- Throughout 2014, the U.S. IPO market put in its strongest performance since 2000, as a broad range of companies took advantage of strong equity markets and an accommodative financing environment to raise capital, according to IPO Watch, a quarterly survey by PwC US. In addition to reaching a 14 year high in proceeds raised, total IPO volume for 2014, as of December 4, reached 288 public company debuts, surpassing the overall volume of 238 IPOs in 2013 and representing the most active environment for newly listed companies since 2007.

IPOs raised a total of $83.9 billion, an increase of 47 percent over the $56.9 billion raised in 2013, and approaching the proceeds of $92.6 billion raised in 2000. The IPO market moderated slightly in the fourth quarter of 2014 as a volatile mid-October crimped new offerings before regaining ground in November. For the quarter, there were 60 public company debuts, as of December 4, representing $13.4 billion in proceeds. This compares to 77 public listings in the fourth quarter of 2013 ending December 31, with a value of $24 billion in proceeds. Included in the 2014 year-to-date IPOs are 18 spin-off IPOs, representing a 38 percent increase over the 13 transactions last year.

Click here to view: Value and volume of IPOs by quarter

"Capital markets activity surged in 2014, as U.S. companies took advantage of the continued low interest rate environment and strong investor appetite for higher return investments in new equity issues and high yield debt," said Henri Leveque, Partner, U.S. Capital Markets and Accounting Advisory Services leader, PwC's Deals Practice. "Multiple sectors performed well, with overall year-to-date volume led by IPOs in healthcare and technology, as investors searched for strong growth opportunities. This year we also witnessed the largest IPO in history and several successful spin-off IPOs, a trend to watch in 2015. Given positive economic forecasts for the U.S. and continued strength in corporate earnings, the IPO markets remain a popular exit for financial sponsors, and provide newly public companies with a platform for liquidity and valuation. Combined with a robust pipeline of upcoming IPOs and strong levels of interest from private companies driving filing activity, IPOs will likely continue to attract investor interest in 2015."

Healthcare continued to dominate the market in terms of total IPO volume, accounting for 39 percent of total IPO volume for all of 2014. On a total proceeds basis, the top industry was technology, driven by the Alibaba IPO, with $31.5 billion in proceeds in 2014. During the fourth quarter, the REIT sector led in value with $2.9 billion in IPO proceeds with just three offerings, capturing 71 percent of the IPO value in the financial services sector.

Click here to view: Value, volume and proceeds of U.S. IPOs by industry

Financial sponsors continued to take an opportunistic view of the open equity capital markets, and actively pursued IPOs and other exits of portfolio companies, backing 61 percent of IPO volume and 71 percent of value in 2014.

Click here to view: Value and volume of Financial Sponsor-backed U.S. IPOs

IPO aftermarket performance declined significantly in 2014, returning 11 percent year-to-date, slightly underperforming the S&P 500. Also, the average first day gains of the 60 IPOs that priced during the fourth quarter of 2014 was eight percent, a decrease from the 21 percent first day gain for the IPOs that priced in the same quarter last year. "While we are seeing high levels of interest for capital-raising activities, investors remain focused on businesses that have the processes and systems they'll need to manage the obligations they'll face as a public company," said Neil Dhar, Partner, U.S. Capital Markets leader, PwC's Deals Practice.

As investors searched for yield, the high yield market also performed well in 2014. There were a total of 567 issuances worth $309.2 billion, as of December 4, slightly down from both 2013 and the record issuances seen in 2012.

"Given indications of tightening monetary policy and increased interest rates, management teams remain active in pursuing funding to refinance debt and further boost liquidity at current rates. We expect the high yield market to remain active going into the New Year, supported in part by increasing levels of M&A," Dhar continued.

PwC US IPO Watch is a quarterly and annual survey of IPOs listed on U.S. stock exchanges. These include IPOs by domestic and foreign companies, best-efforts, filings with the FDIC, and bank demutualizations. IPOs do not include unit investment trusts, commodity trusts and fully classified closed-end funds. Visit our website, www.pwc.com/us/ipo, for the annual 2013 US IPO Watch and information about PwC's IPO Services.

PwC helps corporate and financial sponsors achieve their growth initiatives from deal strategy through value capture. PwC's Deals professionals support clients on a wide range of transactions including domestic and cross-border acquisitions, divestitures and spin-offs, capital events such as IPOs and debt offerings, as well as bankruptcies and other types of business reorganizations.

For more information, visit: www.pwc.com/us/deals

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