Ernst & Young LLP Quarterly IPO Pipeline Analysis Shows Continuing Momentum in the IPO Markets
Smaller issues join active marketplace in Q1 2010
NEW YORK, April 28 /PRNewswire/ -- The IPO pipeline grew to 80 deals seeking $11.4 billion in the first quarter of 2010, from 54 deals registered for $10.3 billion in Q4 of 2009, according to the Ernst & Young LLP US IPO Pipeline study. Activity kept up the pace from the previous quarter; in Q1, 49 new registrants joined the pipeline, with 27 issues going effective. Among the 27 issues, 20 deals were in the pipeline for less than six months.
"We are seeing companies come out of the pipeline at a good rate," says Maria Pinelli, Americas Director, Strategic Growth Markets, Ernst & Young LLP. "In Q1, they took an average of four months to progress from registration to initial offering, compared to an average of five months last year. During Q3, the slowest point of last year, it took companies an average of 22 months to go public. Companies are now able to move ahead as the markets have become more receptive."
The IPO activity continues to pivot toward smaller companies entering the pipeline; 26 deals seek $100 million or less. The current pipeline population shows the re-entry of emerging and innovative companies into the marketplace, replacing the older, larger firms that had the stability and reputation to approach the markets during the economic downturn.
"The past two quarters increased diversity among industries, particularly in sectors that thrive on innovation," says Jackie Kelley, Americas IPO Leader, Ernst & Young LLP. "Technology continues to lead the pack, but this quarter over half of the new listings are less than $100 million. In fact, the total amount being raised this year parallels the dollars of last year at this time, even though it represents almost twice the number of deals. Meanwhile, every sector shows activity, particularly those that were quieter last quarter."
The technology sector carried 15 deals in the pipeline (nine new registrants) representing $2.1 billion. Professional firms and services took second place with 10 deals (seven new registrants) raising $1.5 billion. Diversified industrial products followed with seven deals (three new registrants) seeking $1.2 billion. The oil & gas sector had the largest average deal size of $310.8 billion across its five deals representing $1.4 million. All of those deals are new to Q1.
Year over year IPO Pipeline comparison:
Time Period |
# of Deals |
Dollar Amount |
Average Deal Size |
|
End of Q1 2008 |
90 |
$17.3 billion |
$192.1 million |
|
End of Q1 2009 |
44 |
$11.7 billion |
$265.8 million |
|
End of Q1 2010 |
80 |
$11.4 billion |
$141.9 million |
|
Regionally, the West was most active with 26 companies in registration to raise $3.6 billion, representing an increase in deals, but the same total dollars as the previous quarter. The Northeast had 12 deals raising $1.5 billion. The Southwest followed with 11 companies in registration, though they represent $1.9 billion. California led the states with 23 companies in registration, followed by Texas with eight and Massachusetts with five.
International interest in US capital markets continued. The Cayman Islands, China, South Korea and Thailand were all represented in the US pipeline. China had five companies in the pipeline seeking $196.9 million, an increase over the previous quarter. Each deal from South Korea and Thailand represented $250 million, 76% more than the Q1 average deal size.
The Ernst & Young LLP US IPO Pipeline Report is issued quarterly as a forward-looking indicator of the IPO market. The IPO Pipeline data is refined to eliminate bias from real estate investment trusts and other holding companies that represent assets under management instead of core businesses. It also eliminates any registrants sitting on the books for more than 12 months that have not renewed their standing.
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SOURCE Ernst & Young LLP
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