U.S. IPOs Surge Amid Nettlesome Risks; Top 10 Deals So Far in 2017
[Updated 6/27/17 5:00 pm. See below.] Improving economic fundamentals are stoking the IPO pipeline in the United States and elsewhere, according to a report issued Tuesday by the global consultant and accounting firm EY.
Eighty companies raised a total of $22 billion on U.S. exchanges during the first half of 2017, according to the report EY Global IPO Trends. That’s a sharp contrast to 2016, when uncertainty and doubt about the economy and presidential election clouded U.S. markets. In the first half of last year, EY found that 44 IPOs raised a total of just $6.96 billion in the United States.
[Updated with additional data] Additional data released Thursday by Renaissance Capital, a Greenwich, CT, financial firm that specializes in IPOs showed different totals for the first half of the year, with 54 IPOs raising $10.8 billion. That marks a two-year high in terms of deal count and proceeds, according to the Renaissance Capital report. Technology and healthcare-related IPOs together accounted for 28 of the 54 deals (slightly more than half) and over $2.8 billion in total valuation, Renaissance Capital said.
The strong start in IPO activity so far this year is expected to continue through the second half of 2017, despite continuing uncertainties in fiscal and regulatory policies, according to the EY report.
The biggest U.S. IPO so far occurred in March with the $3.9 billion debut of Snap, the Los Angeles-based Internet and social media company founded in 2011. (Xconomy’s list of top 10 IPOs in the first half of 2017 is below.)
“More marquee company names have entered the filing process and first-day performances remain steady,” Jackie Kelley, EY Americas IPO markets leader said in a statement Tuesday. “This combination has been the catalyst for building a solid pipeline for the remainder of the year.”
IPO activity is unlikely to match the recent peak in 2014, when 291 U.S. companies went public, according to Tim Holl, an EY partner in San Diego. He expects the final tally by the end of the year will come in closer to 153—the annual average for U.S. IPOs over the past 15 years.
“These things ebb and flow,” Holl said in an interview. He attributed the frothiness of the IPO market from 2013 through 2015 to a proliferation of healthcare IPOs that followed years of pent-up conditions that had kept a lid on life sciences IPOs. “That sector really heated up,” Holl said.
As a market class, IPOs are out-performing the S&P 500, Holl said. About 25 percent of the 80 IPOs so far this year were healthcare companies, Holl said. About 18 percent were tech companies and 13 percent were industrial companies. M&A activity also has been stronger this year. “I would say there are not a lot of companies that go public these days that don’t have some kind of a dual track for an M&A deal happening at the same time,” Holl said.
According to EY data, the top 10 U.S. IPOs so far this year are:
|Snap||March||Los Angeles||High Tech||$3.9B||NYSE|
|Invitation Homes||January||Dallas, TX||Real Estate||$1.8B||NYSE|
|Altice USA||June||Bethpage, NY||Cable Media||$1.5 B||NYSE|
|Gardner Denver||May||Milwaukee, WI||Industrials||$950M||NYSE|
|Antero Midstream||May||Denver, CO||Energy||$875M||NYSE|
|Schneider National||April||Green Bay, WI||Industrials||$613M||NYSE|
|Keane Group||January||Houston, TX||Energy||$585M||NYSE|
|Laureate Education||January||Baltimore, MD||Edtech||$490M||NASDAQ|
|Jagged Peak Energy||January||Denver, CO||Energy||$474M||NYSE|