Despite improving from an abysmal September IPO drought, U.S.-based initial offerings continued to lose ground to last year’s pace as deal volumes remained in check in October. For the first time this year, total YTD deal count slipped below the prior-year total as only two IPOs came to market, compared to a whopping 21 last October (2010’s strongest month by deal count). Since July, deal volume is down 85% from the comparable year-ago period. Though YTD proceeds are still up y/y, October marked the fourth straight y/y drop in monthly proceeds, with a 93.1% slump to $196.6M last month; Notably, no IPOs have priced above their filing range since July.
IPOs disappeared from US exchanges in September, as zero companies went public, down from eight a year ago. The drought marked the first month without an IPO since January 2009, during the height of the recession. Despite being shut out in September, strong volume in the IPO markets earlier in 2011 means that year-to-date IPO count remains slightly up year-over-year, with 99 deals in 2011, compared with 96 a year ago. US-listed YTD IPO proceeds are also up from 2010, nearly doubling to $29.6B in 2011 from only $14.9B last year.
IPO volume on US exchanges plunged in August to just four listings, the lowest monthly figure in 2011, from 14 deals in July and 11 in the same period last year. The S&P downgrade of U.S. debt at the beginning of the month, along with continuing European debt woes, compounded seasonal weakness in the deal market. Twenty three IPOs withdrew or postponed their offerings in August, a magnitude of retreat unseen since April 2001, when 23 IPOs withdrew or postponed amid a deflating US tech bubble. On a YTD basis, however, both US-based and international-based IPO volume and proceeds continue to eclipse the year-ago figures with 2011 YTD proceeds more than twice that of the same period in 2010, helped by a string of larger PE-backed offerings earlier this year.
Proceeds raised by US-listed IPOs posted their ninth straight month of y/y gains with $2.3B raised in July on 12 debuts (vs $1.9B on 9 deals in July 2010). Year-to-date, initial offerings have raised 250% of what IPOs raised in the first seven months of 2010. After more than half of last month’s IPOs priced above their filing range, July’s deals also saw the second best average offer/1-day of the year behind a stellar 34% average first-day pop posted by 6 IPOs in March. Strong after-market performance was led by Consumer standouts Teavana, Francesca’s, and Dunkin’ Brands (pg. 2), which advanced 64%, 63%, and 46%, respectively, on their first trading days.
Although June 2011 deal volume fell shy of the year-ago period by one IPO, the market for initial offerings remains strong in 2011, up 23% year-to-date compared to 2010 by deal count with 74 companies debuting so far this year. Additionally, total proceeds are up sharply as the average deal size for the first six months of 2011 has more than doubled to $333mm from $142mm in the comparable year-ago period on the strength of $5 billion-plus IPOs year-to-date.
U.S.-listed IPOs posted the highest year-to-date monthly deal count and proceeds in May, as proceeds offered in the month more than quintupled from the year-ago period on double the deal volume. In contrast to prior months, the strong May proceeds were not attributed to any particular deal and were more a testiment to higher deal volume. In fact, while the largest deals in the previous four months, Arcos Dorados, HCA, Kinder Morgan and Nielsen, accounted for 33%, 77%, 67% and 42%, respectively, of total proceeds offered in the months in which they priced, the largest IPO in May, Yandex, accounted for only 22% of total May proceeds.
US-listed IPOs raised double the proceeds in April 2011 compared with the prior-year period due to a y/y increase in average deal size. The month saw only one more deal by count compared to the year-ago period, however an 88% boost in average proceeds per IPO helped lift April’s overall figure to nearly $3.8B in capital raised. This trend has been a constant one through the first four months of 2011 with average deal size jumping by 233%, 57%, and 402% y/y, in January, February, and March, respectively. Growth in deal size in 2011 stands in contrast to the prior year when a total of 145 IPOs saw their average deal size decline by 25% y/y.
March saw the return of broad market volatility as North Africa and the Middle East slid further into conflict and Japan experienced its devastating earthquake. From 3/1 to 3/16, the VIX Volatility Index jumped 40% while the S&P 500 shed 4%, dropping 2% on 3/16 alone. On the same day, however, the US-based 25 Index actually rose on the back of strong gains from BG Medicine, Inc. (+10%), Endocyte, Inc. (+6%), and MedQuist Holdings Inc. (+6%). While the major indices were locked in a systematic de-risk trade, the US-based 25 Index was able to outperform the major indices and finish the month 3.3% higher.
US-listed IPOs accelerated in February as deal volume more than doubled y/y to sixteen from seven. Activity, however, was heavily concentrated in the first half of the month, as only one IPO priced in the last two weeks of February. Total proceeds for the month rose to $4.3B, from the year-ago $1.2B, on the back of Kinder Morgan’s $2.9B offering. Excluding Kinder Morgan, IPOs are trending smaller, with proceeds averaging $93mm compared with $170mm in the year-ago.
US-listed IPOs recorded a strong opening to the new year. On a year-over-year basis, eight deals priced to last year’s five as proceeds rose five-fold to $3.9B from $732.6M. While the large Nielsen offering ($1.9B) accounted for the lion’s share of total proceeds, even without the deal, US-domiciled issuance rose 87% from the prior year. Meanwhile, proceeds from international issuers listing in the US rose sharply off a smaller comparable.