Activity in the IPO pipeline reached a two-year record in the fourth quarter of 2009, meeting pre-recession levels with 53 companies entering into registration, 30 IPOs launched and the overall pipeline increasing to 54 registrants seeking to raise $10.3 billion, according to the Ernst & Young LLP US IPO Pipeline study. This activity jumped from the previous quarter, which showed some momentum with 30 new registrants, 14 companies that went public and a resulting pipeline of 34 registrants.
The number of companies in the IPO Pipeline increased by 59 percent compared to the third quarter of 2009. Fourth quarter registrants, however, sought less than the $10.9 billion represented at the end of the third quarter.
Many of the 53 new registrants entering the pipeline in Q4 were smaller companies; 24 companies sought deal sizes of $100 million or less. Ten of the new registrants went public within the same quarter, contributing to the high turnover in the pipeline.
“The resurgence of entrepreneurial companies in the pipeline is reminiscent of the pre-recession IPO market,” says Maria Pinelli, Ernst & Young LLP, Americas Director, Strategic Growth Markets. “Emerging companies should take advantage of the current market to fund their growth strategies.”
Year over year IPO Pipeline comparison:
Time Period # of Deals Dollar Amount Average Deal Size
End of Q4 2007 90 $16.8 billion $186.7 million
End of Q4 2008 57 $15.5 billion $272.7 million
End of Q4 2009 54 $10.3 billion $191.0 million
“Finally, the markets are opening up to represent their historic diversity – a range of deal sizes, pre-recession averaging at about $190 million, and a variety of industries led by technology,” says Jackie Kelley, Ernst & Young LLP, Americas IPO Leader. “Although strong companies can access the public markets most of the time, this quarter represents a return to normalcy for the average players. The next few months are shaping up to be a key period of activity.”
The technology sector carried the most deals in the pipeline – 11 registrants, including 10 new issuers – representing $1.7 billion and almost double the number of deals from the previous quarter. Diversified industrial products accounted for six deals representing $1.5 billion, while pharmaceuticals had nine deals representing $596.6 million. Retail and wholesale continued to raise the most capital over other industries with two deals representing $2.2 billion. Most industry categories showed at least one new registrant, while pharmaceuticals gained eight and diversified industrial products gained five.
Regionally, the West was most active with 21 companies in registration to raise $3.6 billion. The Southwest sought $2.4 billion, while the Midwest sought $1.2 billion, each with five companies in registration. California had the highest level of activity among the states with 18 companies in registration, followed by Texas and Georgia with three each.
Our Take: This is great news and speaks to the fact that over half of the Fortune 500 companies today started in a recession. Great time to get in the game.
Source: PR Newswire / RP
