PwC IPO Watch: Late March Surge in IPO Activity March Madness: 10 IPOs and $1.8 billion raised during the second half of March

Over 80% of First Quarter New Issuers Filed Under the JOBS Act

NEW YORK, April 3, 2013 /PRNewswire/ -- A very active last two weeks of March helped close out a strong first quarter for U.S. IPOs. Total IPO proceeds raised in the U.S. in the first quarter of 2013 exceeded the first quarter of 2012, despite a decrease in the volume of IPOs, according to IPO Watch, a quarterly and annual survey of IPOs listed on U.S. stock exchanges by PwC US.  Total proceeds raised during the first quarter were $7.8 billion, slightly down compared to the $8.2 billion in the fourth quarter of 2012, but up 34 percent from the $5.8 billion raised in the first quarter of 2012.  Despite the increase in total proceeds, the number of U.S. IPOs in the first quarter of 2013 declined to 34 from 38 in the fourth quarter of 2012 and 45 in the first quarter of 2012.

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The $7.8 billion in total proceeds raised during the first quarter of 2013 was fueled by strong IPO activity during the bookends of the quarter. The IPO market started off robustly in January 2013, due in part to increased net inflows into equities, and reduced uncertainty surrounding macro-economic events. The 12 IPOs that priced in January 2013 represented the highest volume for any January since before the financial crisis, while total proceeds raised reached a 10-year high for the month of January.  IPO activity in January was led by offerings from Zoetis and CVR Refining, which raised a combined $2.8 billion of proceeds. IPO activity began to slow in the second half of February, although the IPO pipeline was bolstered by 15 new public filings during the month.  The market showed resiliency as the quarter drew to a close, with 10 IPOs and $1.8 billion in total proceeds raised during the second half of March 2013. Increased pricing and public filing activity late in the quarter may portend an active IPO market in the second quarter of 2013.

Click here to view: Value and volume of IPOs by quarter

Click here to view: Q1 comparison: Value and volume of IPOs

"The IPO market got off to a strong start in January, driven by continued inflows into equities, strong equity market performance, and reduced market volatility," said Henri Leveque, leader of PwC's U.S. Capital Markets and Accounting Advisory Services.  "The IPO market was punctuated by a strong start and finish to the quarter, with a three week pause from mid February to early March, demonstrating the importance of new issuers being ready to tap the equity market when the IPO window is open.  The U.S. IPO pipeline remains strong and given the improving economy, we are optimistic about the U.S. IPO market for the remainder of 2013."

In the first quarter of 2013 there were three spin-off IPOs, compared to no spin-off IPOs in the first quarter of 2012. For the purposes of this publication, a spin-off IPO is defined as a company that is separated from its parent company as a stand-alone new public company, with a portion of its ownership offered to new investors via an IPO. The first quarter of 2013 saw spin-off IPOs from Zoetis, CyrusOne and CVR Refining, which raised $2.2 billion, $313.5 million and $600 million, respectively.

According to PwC, financial sponsors backed 50 percent of total deals in the U.S. IPO market in the first quarter of 2013, up from 42 percent in the fourth quarter of 2012, but down from 82 percent of U.S. IPOs in the first quarter of 2012.  "Corporates gained IPO market share in the first quarter in part due to the successful spin-off IPOs we saw in the first three months of the year. At the same time, we believe the moderation of participation among financial sponsors in the IPO market continues to be driven by ample availability of attractive financing options, which is supporting M&A growth strategies," said Neil Dhar, PwC's U.S. Capital Markets Leader. The first quarter of 2013 also saw issuers accessing active high yield debt markets, as investors continued to seek yield.

Click here to view: Value and volume of Financial Sponsor-backed U.S. IPOs

According to publicly available filing information, 41 companies entered the IPO registration process in the first quarter of 2013, a 41 percent increase from the 29 companies that entered the pipeline in the fourth quarter of 2012.  On a year-over-year basis, however, the first quarter IPO pipeline is down 20 percent from the 51 companies that entered in the first quarter of 2012.  A significant portion of this decline is likely due to the JOBS Act, which did not go into effect until April 2012. That legislation allowed Emerging Growth Companies (EGCs) to work confidentially with the SEC, and it requires public disclosure of filings within 21 days of the anticipated IPO roadshow.

In the first quarter of 2013, a total of 28, or 82 percent of the 34 IPOs that priced, were EGCs as defined under the JOBS Act.  The use of the confidential filing provision of the JOBS Act continued to increase in the first quarter, as a total of 26, or 63 percent, of the 41 companies that filed publicly had previously filed confidentially with the SEC.  This trend, which understates the actual IPO pipeline, is likely to increase throughout 2013.  

The financial services sector led IPO volume in the first quarter of 2013 representing 29 percent, followed by the technology sector with 21 percent. In terms of IPO value, the healthcare sector led the way as a result of the $2.2 billion raised by Zoetis, which also represented the only IPO that raised over $1 billion in the first quarter of 2013.

Click here to view: Value and volume of US IPOs by industry

The first quarter of 2013 saw strong IPO pricing overall, as 29 percent of IPOs priced above the range, compared to 20 percent in the first quarter of 2012. The average first day return for the 34 IPOs that priced in the first quarter of 2013 was 12 percent, down from the 17 percent gain for IPOs that priced in the first quarter of 2012.  The technology sector, which had seven IPOs in the quarter, registered a one-day average return of 27 percent, the highest of any industry.  Taken as a whole, first quarter 2013 IPOs are up an average of 16 percent from their IPO date, outperforming the S&P 500, which returned 10 percent during the first quarter of 2013.

PwC US IPO Watch is a quarterly and annual survey of IPOs listed on U.S. stock exchanges.  These include IPOs by domestic and foreign companies, best-efforts, business development companies, filings with the FDIC, and bank demutualization's.  IPOs do not include unit investment trusts, commodity trusts and fully classified closed-end funds.  Visit our website, www.pwc.com/us/ipo, for the annual 2012 US IPO Watch and information about PwC's IPO Services.

PwC's Deals practitioners help corporate and private equity executives navigate transactions to increase value and returns. In today's increasingly daunting economic and regulatory environment, our experienced M&A specialists assist clients on a range of transactions from smaller and mid-sized deals to the most complex transactions, including domestic and cross-border acquisitions, divestitures and spin-offs, capital events such as IPOs and debt offerings, and bankruptcies and other business reorganizations. We help clients with strategic planning around their growth and investment agendas and advise on business-wide risks and value drivers in their transactions for more empowered negotiations, decision-making and execution.  We help clients expedite their deals, reduce their risks, capture and deliver value to their stakeholders and quickly return to business as usual.  Our local and global deal strength is derived from over 1,400 deal professionals in 21 cities in the U.S. and over 9,800 deal professionals across a global network of firms in 75 countries.  In addition, our network firm PwC Corporate Finance provides investment banking services within the U.S.  For more information, visit www.pwc.com/us/deals.

About the PwC Network
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© 2013 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

SOURCE PwC US



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