PricewaterhouseCoopers' U.S. IPO Watch: Third Quarter 2009 IPO Market Strongest since First Quarter of 2008 Total Number of IPOs in 2009 May Surpass 2008
NEW YORK, Oct. 9 /PRNewswire/ -- In the third quarter of 2009, United States initial public offerings (IPOs) recorded the highest quarterly proceeds and number of deals since the first quarter of 2008, with 20 offerings that raised $5.8 billion. According to PricewaterhouseCoopers' Transaction Services practice, the IPO market appears to be working through a solid recovery.
U.S. IPO volume appeared to "hit bottom" in the first quarter of 2009. In fact, for the six months ended March 31, 2009, there were only five IPOs that raised $967 million. However, deal volume picked up in the second quarter and continued to rise in Q3. The third quarter delivered four of the top five IPOs of 2009, including Shanghai-based Shanda Games Ltd., the first offering of over $1 billion since the second quarter of 2008.
A quarter-over-quarter comparison of the number of deals also shows positive signs. There were 20 IPOs that raised $5.8 billion in the third quarter of 2009, nearly quadruple the $1.5 billion raised in the third quarter of 2008, and almost double the number of IPOs listed in that quarter (11).
"Third quarter IPO activity is historically slow; however, we are encouraged by the deal flow and proceeds raised in 2009, clearly building upon improvements that began in late March," said Scott Gehsmann, a capital markets partner in PricewaterhouseCoopers' Transaction Services practice. "Based on the recent growth in the pipeline, we expect that the number of IPOs in 2009 will exceed the 57 offerings last year."
European markets saw a modest increase in third quarter deal flow with IPO offerings totaling $2.6 billion, compared with the $2.5 billion raised in the third quarter of 2008. In the United Kingdom, there was a significant increase in both the volume and value of IPOs. The third quarter also saw significant IPO activity in Hong Kong and Shanghai.
Financial sponsor-backed companies contributed more than half of the Q3 IPOs, a developing trend PwC expects to continue as equity valuations improve.
The increase in number of IPOs in the financial services sector was primarily attributed to the five Real Estate Investment Trusts (REITs) completing IPOs during the third quarter. As debt financing remains a challenge, REITs may continue to look for capital from the IPO markets. There was also significant activity seen in the technology sub-sectors (e.g., software, gaming and semiconductors).
"We have witnessed a significant uptick in registration and pre-registration activity (e.g., banker pitches, financial sponsor interest in IPO readiness, CFO searches, etc.) and our call volume for IPO services is on a steady rise, thereby signaling a growing pipeline of deals," concluded Gehsmann.
Three months ended September 30, 2009 - Volume and Value by Industry (USD millions)
The IPOs completed through the first nine months of 2009 were listed on the U.S. stock exchanges as follows:
US IPO Watch is a quarterly survey of all IPOs listed on U.S. exchanges. These include IPOs by domestic and foreign companies, best-efforts, business development companies, filings with the FDIC, and bank demutualizations. IPOs do not include unit investment trusts and fully classified closed-end funds. Visit our website, www.pwc.com/ustransactionservices, for our 2006, 2007 and 2008 US IPO Watch reports.
The PricewaterhouseCoopers Transaction Services practice provides due diligence for M&A transactions, along with advice on M&A strategy and integration, divestitures and separation, valuations, accounting, financial reporting, and capital raising. With approximately 1,000 deal professionals in 16 cities in the U.S., and a global network of over 6,000 deal professionals in 90 countries, experienced teams are deployed with deep industry and local market knowledge, and technical experience tailored to each client's situation. The Transaction Services team can be involved from strategy to integration and employ an integrated business approach to uncover the realities of a deal. The field-proven, globally consistent, controlled deal process helps clients minimize their risks, progress with the right deals, and capture value both at the deal table and after the deal closes. For more information, visit www.pwc.com/ustransactionservices.
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