IPO Pipeline Surges to Highest Level Since 2007, According to Ernst & Young LLP

Technology and Chinese companies drive activity among current IPOs and new registrants

Oct 26, 2010, 09:12 ET from Ernst & Young

NEW YORK, Oct. 26 /PRNewswire/ --The IPO pipeline reached a total of 133 companies in registration by the end of Q3 2010, representing 19% growth over the Q2 2010 total of 112, according to the quarterly Ernst & Young LLP US IPO Pipeline study.  Total dollars also grew to $26.4 billion, a quarterly increase of 4%.  

Average deal size decreased by 12% to $198 million, showing stronger interest from smaller companies in going public. Also for Q3, 70 registrants are seeking $100 million or less, compared to 59 registrations at that level for Q2.  

Nineteen of the companies registered to go public in the US are from foreign countries – mostly China.  Interestingly, all 16 of the China-based companies in the pipeline filed to raise $100 million or less.  Ten of these companies are new registrants in Q3.  

"We saw a surge in international registrations this quarter, especially from Chinese companies," says Maria Pinelli, Americas Director, Strategic Growth Markets, Ernst & Young LLP.  "There are currently 16 China-based registrations in industries as varied as mining, education, consumer products and business services – quite a change from the usually technology-heavy Chinese registrations."

Year over year IPO Pipeline comparison:

Time period

# of companies in
the Pipeline

Total dollar
amount in the

Average deal size in
the Pipeline

# of US IPOs that
went public in the

End of Q3 2007


$30.4 billion

$201.5 million


End of Q3 2008


$17.6 billion

$231.4 million


End of Q3 2009


$10.9 billion

$321.6 million


End of Q3 2010


$26.4 billion

$198.3 million


"Private equity and venture capital firms are looking to exit their investments in droves, and a public offering is one of their top considerations," says Jackie Kelley, Americas IPO Leader, Ernst & Young LLP.  "Therefore, it's no surprise that nine of the top 10 deals in the pipeline are backed by private equity funds."

Technology led the number of companies in the pipeline with 21 registrations. The technology industry also had 11 effective IPOs.  Two of the three largest deals that went effective last quarter (SMART Technologies Inc. and KASLION Acquisition B.V.) were tech companies.  Technology companies in the pipeline seek a total of $2.8 billion, for an average deal size of $132.6 million.

Among other industries, the pipeline includes 19 professional services companies (seeking $2.7 billion) and 16 pharmaceutical companies (seeking $1.6 billion).

Regionally, California continues to lead deal volume with 23 companies seeking $2.4 billion, followed by Massachusetts and Texas, both with nine companies seeking $1.8 billion.

The Ernst & Young LLP U.S. IPO Pipeline analysis 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 – long-term applicants that may bloat numbers, but don't reflect current market trends.  

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SOURCE Ernst & Young