Ernst & Young LLP Quarterly IPO Pipeline Report Shows the Most New Registrants in Two Years

IPO activity increases sharply in active fourth quarter

Jan 29, 2010, 09:18 ET from Ernst & Young

NEW YORK, Jan. 29 /PRNewswire/ -- Activity in the IPO pipeline reached a two-year record in the fourth quarter of 2009, meeting pre-recession levels with 53 companies entering into registration, 30 IPOs launched and the overall pipeline increasing to 54 registrants seeking to raise $10.3 billion, according to the Ernst & Young LLP US IPO Pipeline study.  This activity jumped from the previous quarter, which showed some momentum with 30 new registrants, 14 companies that went public and a resulting pipeline of 34 registrants.

The number of companies in the IPO Pipeline increased by 59 percent compared to the third quarter of 2009. Fourth quarter registrants, however, sought less than the $10.9 billion represented at the end of the third quarter.

Many of the 53 new registrants entering the pipeline in Q4 were smaller companies; 24 companies sought deal sizes of $100 million or less.  Ten of the new registrants went public within the same quarter, contributing to the high turnover in the pipeline.

"The resurgence of entrepreneurial companies in the pipeline is reminiscent of the pre-recession IPO market," says Maria Pinelli, Ernst & Young LLP, Americas Director, Strategic Growth Markets.  "Emerging companies should take advantage of the current market to fund their growth strategies."

    
    
    Year over year IPO Pipeline comparison:
    
       Time Period       # of Deals    Dollar Amount    Average Deal Size
       End of Q4 2007    90            $16.8 billion    $186.7 million
       End of Q4 2008    57            $15.5 billion    $272.7 million
       End of Q4 2009    54            $10.3 billion    $191.0 million

"Finally, the markets are opening up to represent their historic diversity – a range of deal sizes, pre-recession averaging at about $190 million, and a variety of industries led by technology," says Jackie Kelley, Ernst & Young LLP, Americas IPO Leader.  "Although strong companies can access the public markets most of the time, this quarter represents a return to normalcy for the average players.  The next few months are shaping up to be a key period of activity."

The technology sector carried the most deals in the pipeline – 11 registrants, including 10 new issuers – representing $1.7 billion and almost double the number of deals from the previous quarter.  Diversified industrial products accounted for six deals representing $1.5 billion, while pharmaceuticals had nine deals representing $596.6 million.  Retail and wholesale continued to raise the most capital over other industries with two deals representing $2.2 billion.  Most industry categories showed at least one new registrant, while pharmaceuticals gained eight and diversified industrial products gained five.

Regionally, the West was most active with 21 companies in registration to raise $3.6 billion.  The Southwest sought $2.4 billion, while the Midwest sought $1.2 billion, each with five companies in registration.  California had the highest level of activity among the states with 18 companies in registration, followed by Texas and Georgia with three each.

International companies continued to seek the US capital markets, as well.  The Netherlands, China, the Cayman Islands and Thailand were all represented in the pipeline.  China had four companies in the pipeline seeking a total of $166.3 million.

The Ernst & Young LLP US IPO Pipeline Report is issued quarterly as a forward-looking indicator of the IPO market.  The IPO Pipeline data is refined to eliminate bias from financial services organizations, real estate investment trusts and other holding companies that represent assets under management instead of core businesses.  It also eliminates any registrants sitting on the books for more than 12 months.

About Ernst & Young's Strategic Growth Markets Practice

Ernst & Young LLP's Strategic Growth Markets (SGM) practice guides leading high-growth companies.  Our multi-disciplinary team of elite professionals provides perspective and advice to help our clients accelerate market leadership.  SGM delivers assurance, tax, transactions and advisory services to thousands of companies spanning all industries.  Ernst & Young is the undisputed leader in taking companies public, advising key government agencies on the issues impacting high-growth companies and convening the experts who shape the business climate.  For more information, please visit us at www.ey.com/us/strategicgrowthmarkets.

About Ernst & Young

Ernst & Young is a global leader in assurance, tax, transaction and advisory services.  Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality.  We make a difference by helping our people, our clients and our wider communities achieve their potential.

For more information, please visit www.ey.com.

Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity.

This news release has been issued by Ernst & Young LLP, a member firm of Ernst & Young Global Limited located in the US.

SOURCE Ernst & Young



RELATED LINKS

http://www.ey.com