PwC US IPO Watch: U.S. IPO Market Volume Jumps Over 100% in 2010 According to PwC

Fourth Quarter Delivers Highest Deal Volume Since 2007; Financial Sponsor-Backed Offerings Continue to Drive IPO Volume; Led by China, Non-U.S. Issuers Contribute 49% of Quarterly IPO Activity

Dec 15, 2010, 14:01 ET from PwC

NEW YORK, Dec. 15, 2010 /PRNewswire/ -- U.S. investors have shown an increasing appetite for IPOs through the final quarter of 2010, as activity in the U.S. IPO market has already surpassed 2008 and 2009 levels, according to PwC's US IPO Watch, a quarterly and annual analysis by the firm of IPOs on U.S. stock exchanges.

(Logo: http://photos.prnewswire.com/prnh/20100917/NY66894LOGO )

With 154 IPOs completed, that raised a total of $37.5 billion year-to-date, 2010 activity represents a 123 percent increase in volume and 49 percent increase in value, compared with the $25.2 billion raised from 69 IPOs in 2009.  In addition, PwC says the surge of activity in the fourth quarter of 2010 confirms the IPO market has recovered from the doldrums of 2008 and 2009.

"Robust fourth quarter activity was largely driven by a continued wave of financial sponsor-backed IPOs, a welcomed interest from non-U.S. issuers, particularly from China and a near record-breaking IPO.  With these factors in place and backed by the growing number of offerings in the pipeline, we expect continued momentum in U.S. IPO market activity as we enter 2011," said Scott Gehsmann, a capital markets partner in PwC's Transaction Services practices.  "Companies looking to take advantage of the IPO market recovery need to carefully prepare for life as a public company and ensure they have the agility needed to access capital when the IPO window is open."

As of December 14th, 55 IPOs were completed in the fourth quarter, raising a total of $23.5 billion, versus 35 IPOs which raised $17.1 billion in the fourth quarter of 2009.  According to PwC, this represents an increase of 57 percent in volume and 37 percent in value over the fourth quarter of 2009.  The current quarter's data includes General Motors' notable offering of $15.8 billion, representing 67 percent of the quarter's proceeds, and the largest IPO in the U.S. markets since the Visa IPO ($17.9 billion) in the first quarter of 2008.  In 2009, the largest IPO of the year was also completed in the final quarter – the $7.0 billion Banco Santander S.A. deal.

Q4 Comparison: Value and Volume of IPOs

(Photo: http://photos.prnewswire.com/prnh/20101215/NY18036-a )

(Photo: http://photos.prnewswire.com/prnh/20101215/NY18036-b )

The fourth quarter of 2010 witnessed a continued growth in companies commencing the IPO registration process as 30 new companies entered an already well-populated IPO pipeline.  Further, there were only two offerings withdrawn during the quarter, signaling a significant improvement and increasing confidence from issuers and investors, according to PwC.

Value and Volume of IPOs by Quarter

(Photo: http://photos.prnewswire.com/prnh/20101215/NY18036-c )

(Photo: http://photos.prnewswire.com/prnh/20101215/NY18036-d )

Leadership from financial sponsors was a major factor boosting the IPO market in 2010, according to PwC.  During the fourth quarter of 2010, financial sponsors contributed 40 of the 55 IPOs (through December 14th), accounting for 73 percent of offering volume and 26 percent of offering value.  In year-to-date figures, financial sponsor-backed IPOs were also a major driver, contributing 123 of 154 offerings, raising $17.5 billion, or 80 percent of IPO volume and 47 percent of year-to-date proceeds.

"Private equity and venture capital portfolio companies utilized the U.S. IPO market to generate liquidity and, in some cases, to provide sponsors with an avenue to exit their investments," continued PwC's Gehsmann.  "We expect financial sponsors to again be a major player in the IPO market in 2011, though other deal channels are improving and providing attractive monetization opportunities."

Three months ended December 31: Value and Volume of Financial Sponsor-backed U.S. IPOs


(in $US millions)







Q4 2010*


Q4 2009


Value

Number of IPOs


Value

Number of IPOs

Financial sponsor-backed

$                    6062.9

40


$               4,407.0

21

Corporate backed

17,439.1

15


12,693.2

14

Total

$                 23,502.0

55


$             17,100.2

35

(*Q4 2010 data through December 14, 2010 only)




Another driver of the surge in IPO activity during 2010 was increased interest from non-U.S. issuers, according to PwC.  Non-U.S. companies contributed 27 IPOs raising a total of $3.1 billion in the fourth quarter (through December 14th), representing 13 percent of total deal value.  China contributed 21 of the 27 non-U.S. offerings raising approximately $2.5 billion in the quarter.  Through December 14th, non-U.S. issuers contributed a total of 57 offerings and IPO proceeds of $7.1 billion during 2010.

"On the basis of deals in the pipeline, we expect small- and mid-cap issuers from abroad will continue to pursue capital in the U.S. IPO markets during 2011.  The growing number of non-U.S. issuers is adding welcomed diversity to the U.S. IPO market," said Gehsmann.

Three months ended December 31: Value and Volume of IPOs by U.S. and Non-U.S. Companies


(in $US millions)





Q4 2010*


Q4 2009


Value

Number of IPOs


Value

Number of IPOs

U.S.

$               20,437.6

28


$             9,273.6

26

Non-U.S.

3,064.4

27


7,826.7

9

Total

$               23,502.0

55


$           17,100.2

35

(*Q4 2010 data through December 14, 2010 only)




According to PwC, the consumer sector led fourth quarter IPO activity with 12 IPOs, raising $17.2 billion, while the financial sector followed close behind with 11 offerings and proceeds of $2.3 billion raised.  Of course, the $15.8 billion GM IPO contributed heavily to the fourth quarter consumer industry sector results.

Three months ended December 31: Value and Volume of U.S. IPOs by Industry


(in $US millions)







Q4 2010*


Q4 2009


Value

Number of IPOs


Value

Number of IPOs

Consumer

$               17,222.1

12


$           1,784.5

6

Financial

2,305.3

11


7,452.7

3

Services

1,103.8

10


2,823.2

7

Healthcare

669.3

7


1,608.2

7

Technology

727.1

6


350.1

3

Energy

954.0

4


1,293.8

2

Industrial

190.2

2


316.8

3

Transportation

230.6

2


409.8

2

Other

99.8

1


1,061.1

2

Total

$               23,502.0

55


$          17,100.2

35

(*Q4 2010 data through December 14, 2010 only)




There were 28 IPOs listed on the NASDAQ in the fourth quarter, while 27 listed on the NYSE.  Excluding GM, the other 26 IPOs listed on the NYSE raised $4.6 billion, compared to $3.1 billion in proceeds raised by the 28 IPOs on the NASDAQ.

Three months ended December 31: Value and Volume of U.S. IPOs by Exchange


(in $US millions)





Q4 2010*


Q4 2009


Value

Number of IPOs


Value

Number of IPOs

NYSE

$                20,426.7

27


$             12,404.2

17

NASDAQ

3,075.3

28


4,696.0

18

Total


$                23,502.0

55


$             17,100.2

35

(*Q4 2010 data through December 14, 2010 only)



As IPO market momentum increases, PwC contends that many companies are assessing their readiness to go public.  A new PwC report released this afternoon entitled, Executing a Successful IPO, shares key insights on the IPO process in providing an in-depth discussion on how careful thought, preparation, and planning are critical to a company's successful IPO.  Visit our website, www.pwc.com/us/ipo to download the report.

PwC's 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 demutualizations.  IPOs do not include unit investment trusts and fully classified closed-end funds.  Visit our website, www.pwc.com/us/ipo, for the 2009 US IPO Watch and information about PwC's IPO Services.

PwC's Transaction Services practice provides due diligence for M&A transactions, along with advice on M&A strategy and integration, restructuring, divestitures and separation, and valuations. With approximately 1,000 deal professionals in 16 cities in the United States, 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 about M&A and related PwC services, please visit: www.pwc.com/ustransactionservices.

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PwC US


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