2014 realizes strongest US IPO numbers in over a decade

- As of December, there were 288 IPOs on US exchanges, which raised $95.2b, a 54% increase in capital over 2013.

- The health care sector accounted for over one-third of the deals.

- The US hosted more foreign IPOs in 2014 than any other market.

- There is a strong pipeline of deals for Q1 2015, with over 60 companies ready to list, expecting to raise $22.0b.

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Dec 10, 2014, 08:00 ET

NEW YORK, Dec. 10, 2014 /PRNewswire/ -- With 288 deals and $95.2b raised, 2014 will end with record activity in the US IPO markets, according to the EY Global IPO Trends: 2014 Q4 report released today. While 2013 saw a revival of IPOs in the US, 2014 was even more exceptional. As of December, the number of listings was at its highest point since 2000 and is a 27% increase over 2013. IPO listings in 2014 also raised 54% more in capital than in 2013.

While Q4 saw a pause in the markets after the Alibaba listing, IPO investments still remained strong throughout the end of the year given the lack of alternative investment options and low interest rates. In addition, as stock markets have been trending higher, IPOs have been outperforming market indices. Companies that have listed on US exchanges in 2014 have averaged year-to-date returns of 27.8%, compared to the S&P 500 at 12.2%.

"Concerns this is a 2000-like bubble are overplayed," said Jackie Kelley, EY Global and Americas IPO Leader. "Companies coming to the public markets are well-led, well-priced and have a good story to tell. Their stocks tend to outperform the market attracting solid investor interest."

"Global IPO activity also gained momentum with 1,206 IPOs, which raised $256.5b. This was the best year for IPOs since 2011," said Kelley.

In addition, PE- and VC-backed exits were the most significant driver of US IPO activity. A total of $68.2b was raised via 181 financial-sponsored IPOs and accounted for 72% of US IPOs by value and 63% by number.

Cross-border listings still increasing
Not surprisingly, the success of the Alibaba listing continues to encourage more cross-border activity. Most of these deals are coming from Europe (26), China (16) and Israel (12). Cross-border activity still remains strong in the US, which accounts for 52% of cross-border deals globally by number and 80% by capital raised throughout 2014.

"In 2014, the US attracted more cross-border IPOs than any other region and its stock exchanges led the world in terms of deals and capital raised. In addition to strong IPO valuations on foreign listings, the growing familiarity with US accounting regulations, the overall strength of the US markets and the access to capital – are likely to encourage more cross-border IPOs on US exchanges in 2015," says Kelley. In addition, the US hosted more foreign IPOs in 2014 than any other market, with 67 IPOs raising US$40.8b.

Health care leads as driving sector
There were 111 IPOs from the health care sector, which raised $9.9b in 2014. Within this broad category, pharmaceuticals and biotech have been particularly noteworthy, with many companies encouraged by the favorable regulatory environment both for firms developing drugs for rare diseases and those choosing to take advantage of the confidential filing options under the JOBS Act. Out of the 22 deals with first-day pricing pops of over 50% in 2014 in the US, 12 were from the health care sector.

Other strong performing sectors were technology, which listed 47 IPOs and raised $36.0b, and financials, which listed 29 IPOs and raised $15.7b.

IPO activity will start strong in 2015
There is a robust pipeline of over 100 companies ready to list in 2015, of which 60 are expected to go public and raise around $22.0b in Q1 2015. Although we may start to see some pressure on after-market performance, with the pricing gap between financial sponsors and institutional investors at a historically low level, the stage is set for the IPO window to remain open in the first quarter.

In general, the US economy should push ahead at a good pace in 2015. Continued monetary policy support coupled with solid fundamentals – in particular a strong jobs market, improvement in housing activity and consumer spending – should support continued gains in economic confidence.

Notes to editors
All data sourced from Dealogic.

About EY's IPO offerings
EY firms are leaders in helping to take companies public worldwide. With decades of experience our global network is dedicated to serving market leaders and helping businesses evaluate the pros and cons of an IPO. We demystify the process by offering IPO readiness assessments, IPO preparation, project management and execution services, all of which help prepare you for life in the public spotlight. Our EY Global IPO Center of Excellence is a virtual hub which provides access to our IPO knowledge, tools, thought leadership and contacts from around the world in one easy-to-use source.

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