IPO activity so far in 2014!
Prospects look extremely positive!!
Entrepreneurs out there, this is a great time for you to rejoice and grab the opportunity. Investors are hopeful than ever and the trends in the market reflect this sentiment. This is the second year in a row after a decade of downturn in the IPO market. 2013 was a successful year with the US IPO market raising $54.9 billion with 222 companies since the year 2000. 2014 is keeping the trend alive with 64 companies raising $10.6 billion in the US.
According to Reuters, global activity in the IPO market has doubled for the first quarter in 2014 when compared to the first quarter in 2013. $28.2 billion was raised in the IPO markets so far in 2014 globally. With some more time left for the first quarter to end, there is expected to be far greater activity. According to Renaissance Capital, IPO proceeds in the first quarter of 2014 are dominated by the Asia Pacific and European regions. Six IPOs larger than $1 billion took place in the Asia-pacific region riding on the trend established in 2013. Fifty five percent of the IPOs filed to date are from the health care industry. However, activity is expected to pick up in the tech industry as well.
In the US, biotech companies dominated in the first two months and saw the technology sector picking up its pace in March. With more than 100 filings underway during the quarter, the trend is expected to continue for the rest of the year. Of the deals done so far, private equity deals reflect greater in the deal amounts while VC dominates quantitatively in the number of deals done successfully. PE-backed deals are 16 while VC-backed deals are 40 in number. Average US IPO return was calculated as 25.3 percent.
The top ten largest IPOs of the quarter returned an average of 10 percent. The top ten largest IPOs of the quarter include Santander Consumer USA, Rice Energy, EP Energy, CBS Outdoor Americas, King Digital Entertainment, RSP Permian, CHC Group, Nord Angelia Education, TriNet Group and Ladder Capital.
Of these deals, 2 deals belong to financial sector (Santander Consumer USA and Ladder Capital), 3 deals each belong to the energy sector (Rice Energy, EP Energy and RSP Permian) and business services (CBS Outdoor Americas, Nord Anglia Education and TriNet Group), and one each to the transportation (CHC Group) and tech sectors (King Digital Entertainment). Santander Consumer USA is the largest IPO raising over a billion. The highest return from the IPO was for RSP Permian with 48.2 percent followed by 33.2 percent of TriNet Group. The best returns of the top ten deals were from the energy sector. Eight of the ten had private equity behind them, including three LBOs - EP Energy, CHC Group and Nord Anglia.
The only tech deal in the top ten largest IPOs of the quarter is the King Digital Entertainment, the company famous for its candy crush saga. It raised $500 million and its IPO is proving to be pivotal in boosting the European company IPOs.
This outstanding activity in the IPO market reflects investor confidence, recent IPO performance and equity market indices that are approaching record highs. This is expected to be reflected in great employment opportunities in private equity and the overall financial sector as well.
