PwC's Q4 IPO Watch Finds 2013 IPO Volume Hits Highest Level in Six Years Fourth quarter IPO volume and proceeds cap strongest quarter of 2013

Stage is set for growth in 2014

NEW YORK, Dec. 19, 2013 /PRNewswire/ -- Strong demand for initial public offerings (IPOs) continued in the fourth quarter of 2013, capping a robust year for the capital markets and setting the stage for continued growth in the new year, according to IPO Watch, a quarterly survey of IPOs listed on U.S. stock exchanges by PwC US. Total IPO volume for 2013, as of December 17, reached 237 public company debuts, easily surpassing overall volume of 146 IPOs in 2012 and representing the most active environment for newly listed companies since 2007.

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In addition, 2013 year-to-date IPOs raised a total of $56.8 billion, representing an increase of 111 percent over the $26.9 billion -- excluding Facebook -- raised in 2012 ($42.9 billion, including Facebook). The high yield market also continued to thrive, seeing a total of 651 issuances worth $323 billion, approaching 2012 record issuances of 684 and $345 billion.

IPO volume and total proceeds raised peaked during the fourth quarter of 2013, exceeding each prior quarter during the year. There were a total of 77 IPOs during the fourth quarter, a 22 percent increase over the 63 IPOs in the third quarter of 2013, and a 103 percent increase compared to 38 listings in the fourth quarter of 2012. Total IPO proceeds raised during the fourth quarter were $24 billion, a 103 percent jump over the $11.8 billion in the third quarter of 2013 and a 193 percent gain over the $8.2 billion in the fourth quarter of 2012.  

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

"Demand for IPOs continued to build during the fourth quarter, supporting the momentum as we enter 2014," said Henri Leveque, leader of PwC's U.S. Capital Markets and Accounting Advisory Services.  "Driven by increasing investor appetite for growth companies, low volatility and strong equity markets, the field of IPOs has continued to broaden across industry sectors. The environment for IPOs has remained highly accommodative and we expect the new issuance window to remain open as we head into 2014."

Despite a slight pullback in IPOs and high yield issuance during the budgetary debate and debt ceiling negotiations in Congress in early October, the fourth quarter of 2013 was marked by consistency and low volatility. By late October, new high yield issuances and IPO activity surged, with October having 34 IPOs, supported by Plains GP Holdings, the largest IPO of the year which raised $2.8 billion.

With the highly-anticipated Twitter debut, IPO volume remained high in November with 29 total new issuers. November was also strong for the high yield market with year-to-date issuances in the first 11 months reaching more than $300 billion for only the second time in history, after 2012's record $344.8 billion in issuances. The active IPO and high yield market continued into December, during which time the Hilton IPO raised $2.35 billion, ranking as the second largest IPO of 2013.

Similar to the support the strong equity market has provided for new issuers, the favorable debt market has enabled entrants with an opportunity to refinance, and to a lesser extent, generate liquidity and fund mergers and acquisitions. According to PwC, refinancing drove 53 percent of year to date volume in the high yield market and accounted for 44 percent of volume in the fourth quarter. Acquisitions represented 14 percent year to date volume, and represented 21 percent of the volume in fourth quarter.

The average first-day return for the 77 IPOs that priced in the fourth quarter 2013 was 21 percent, compared to 13 percent for IPOs that priced in the fourth quarter of 2012. Additionally, fourth quarter IPOs saw strong aftermarket performance, returning an average of 34 percent since the IPO date and outperforming the S&P 500, which increased by six percent during the quarter. 

"Investors are seeking returns in a low yield rate environment and the IPO market has proven to be an attractive place to invest in the past year," said Neil Dhar, PwC's U.S. Capital Markets Leader.  "Financial sponsors continued to pursue liquidity in their investments with more than three times the proceeds being raised by financial sponsor backed U.S. IPOs in the fourth quarter of 2013, compared to the proceeds raised in the fourth quarter of 2012. At the same time, the high yield debt market has remained active as issuers continued to amend and extend existing debt and issue new debt in this opportunistic market in the fourth quarter of 2013."

Financial sponsors remained active in the IPO market during the fourth quarter of 2013, with a total of 46 financial sponsor-backed IPOs, a 188 percent increase over the 16 IPOs in the fourth quarter of 2012.  Proceeds for corporate sponsored IPOs increased by 62 percent, while financial sponsored proceeds increased by a tremendous 332 percent. 

Click here to view: Value and volume of financial – sponsor – backed U.S. IPOs

The financial services and technology segments led IPO volume during the fourth quarter, continuing the strong momentum from previous quarters. In terms of overall value, the energy sector led the way with eight IPOs during the fourth quarter raising a total of $6.4 billion. Beyond energy, investor demand was seen across all major sectors which generated significant increases over the fourth quarter of 2012 in both value and volume. 

Click here to view: Value and volume of U.S. IPOs by industry

The fourth quarter of 2013 saw three spin-off IPOs, compared to five spin-off IPOs in the third quarter of 2013 and six in the fourth quarter of 2012. For all of 2013 there have been 14 spin-off IPOs, compared to seven for all of 2012.

According to publicly available filing information, 58 companies entered the IPO registration process in the fourth quarter, a decrease from the third quarter, but a sharp increase of 100 percent from the 29 companies that entered in the fourth quarter of 2012. The publicly available IPO pipeline includes 114 companies looking to raise $18.5 billion. It should be noted that due to the confidential filing provision of the JOBS Act, the true IPO pipeline is likely much larger. Of the 77 IPOs that priced during the fourth quarter, 58 or 75 percent were emerging growth companies (EGCs) as defined under the JOBS Act. The confidential filing provision of the JOBS Act continued to be well received during the fourth quarter, as 52 of the 58 (90 percent) EGC IPOs previously filed confidentially with the SEC.

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 our deal professionals in 35 cities in the U.S. and 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 PwC US 
PwC US helps organizations and individuals create the value they're looking for. We're a member of the PwC network of firms in 157 countries with more than 184,000 people. We're committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com/US. Gain customized access to our insights by downloading our thought leadership app: PwC's 365™ Advancing business thinking every day 

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© 2013 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC US refers to the US member firm, and PwC may refer to either the PwC network of firms or the US member firm. 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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