U.S. IPO Proceeds Surpass $10 Billion for Third Consecutive Quarter, According to PwC

NEW YORK, June 29, 2011 /PRNewswire/ -- IPO proceeds in the United States surpassed $10 billion for the third consecutive quarter, signaling the ongoing strength and attractiveness of the IPO market as an avenue to raise capital, according to US IPO Watch – a quarterly and annual analysis of IPOs on U.S. stock exchanges by PwC US.

(Photo: http://photos.prnewswire.com/prnh/20110629/NY27688-a)

(Photo: http://photos.prnewswire.com/prnh/20110629/NY27688-b)

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

As of June 27, IPO proceeds in the second quarter reached $11.9 billion compared to $5.2 billion in the second quarter of 2010 representing a 129 percent increase in total proceeds raised.  The same period also witnessed an increase in IPO volume to 47 IPOs compared to 41 in the second quarter of 2010 and 32 in the first quarter of 2011.  May proved to be the most active month, generating nearly half of total offerings for the second quarter, with 22 IPOs yielding $6.2 billion.

"Larger offerings are being completed and a growing number of companies are entering the pipeline – key factors that have helped contribute to three consecutive quarters where we've totaled more than $10 billion in proceeds," said Henri Leveque, Leader of PwC's Capital Markets and Accounting Advisory Practice.  "Despite the recent volatility in the capital markets, we are optimistic that the IPO market will continue its resurgence and remain an important source of liquidity and capital for both domestic and foreign companies."

PwC has seen an increase in the number of companies entering the IPO registration process, with another 77 companies entering the IPO pipeline in the second quarter, an increase compared to the first quarter of 2011 when 52 companies filed for IPOs.  Only one planned offering was withdrawn in the second quarter of 2011.

Year to date, there have been 79 pricings that generated $24.3 billion in proceeds, more than double the amount raised for the first half of 2010, when there were 70 IPOs that generated $9.4 billion.  The ongoing strength and recovery of the IPO market in the first half of 2011 puts it on pace to eclipse the full year 2010 proceeds of $39 billion, according to PwC.

Five offerings, all of which were backed by financial sponsors, generated proceeds of over $1 billion in the first half of 2011.  As a group, these five offerings raised $10.9 billion, or 45 percent, of total proceeds year to date.  Two of these offerings were listed during the second quarter of 2011 – Argentina-based Arcos Dorados Holdings with $1.2 billion and Netherlands-based Yandex N.V. with $1.3 billion.  These two large offerings helped increase average deal size 100 percent to $254 million in the second quarter 2011 from $127 million in the second quarter of 2010.

Financial sponsor-backed IPOs continued their leadership of the U.S. IPO market during the second quarter, contributing 80 percent of total value with $9.6 billion in proceeds and approximately 66 percent of volume with 31 of the quarter's 47 IPOs.

"Private equity and venture capital firms are continuing to lead the IPO market, succeeding in generating returns on their investments through new listings.  There were a number of high-profile companies backed by financial sponsors that went public in the quarter. Strong interest generated by these companies is an important driver of future financial sponsor-backed deals," added Leveque.

Offerings from non-U.S. companies increased during the second quarter with 14 offerings, up from 10 in the second quarter of 2010.  Value jumped significantly to $4.4 billion, or 37 percent of total value, compared to $600 million in the second quarter of 2010.  China continues to lead among non-U.S. issuers, contributing eight IPOs with proceeds of $1.4 billion, compared to six IPOs that raised $300 million over in the same period last year.  Other non-U.S. issued IPOs in the second quarter of 2011 came from Greece, France, Australia, Canada, Argentina and the Netherlands.

Technology, Business Services and Financial Services industries dominated the majority of IPO volume and generated nearly 62 percent of total value in the second quarter of 2011.

"The second quarter of 2011 saw resurgence in Technology companies returning to the IPO market, representing 37 percent of total proceeds.  There were several high-profile Technology companies completing IPOs in the second quarter, and several others that are currently in the pipeline.  With technology representing approximately 25 percent of the companies entering the pipeline in the second quarter, technology will be a key sector in the IPO market in 2011," added Leveque.

Quarterly Snapshot: IPO Performance

A look at post-IPO performance as compared to the initial offering price revealed that on average, second quarter IPOs showed a 9 percent increase in share price on day one after pricing, and an 8 percent increase one week after pricing.  Financial sponsor-backed IPOs showed an average return of 12 percent on both day one after pricing and one week after pricing – whereas corporate-backed IPOs saw an average increase of 3 percent in share price on day one after pricing, and a 2 percent increase above its IPO price one week after pricing.  Technology IPOs had the highest average one day return of 16 percent, while industrial sector IPOs had the greatest average one week return at 17 percent.  The largest one day gain in the second quarter belonged to LinkedIn, which saw its first-day stock price rise more than 100 percent.  Pricing still remains a concern as demonstrated in the second quarter with 31 of the 47 IPOs pricing within and above the expected range, and 16 below the range.

"While volatile market conditions make the IPO process more challenging, companies who are thoroughly prepared are in the best position to access the capital markets when the IPO window is open," noted PwC's Leveque.  "From preparation to pricing to the days after the initial listing, there are a number of factors to consider and have in place to succeed as a public company.  Increased scrutiny, and concerns about markets can be navigated successfully if potential issuers are ready for scenarios that may challenge their listings."

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 demutualizations.  IPOs do not include unit investment trusts and fully classified closed-end funds.  Visit our website, www.pwc.com/us/ipo, for the annual 2010 US IPO Watch and information about PwC's IPO Services.

PwC's Transaction Services practice provides advice on capital raising which includes initial public offerings and public debt, due diligence on both the buy and sell sides of a deal, M&A strategy, valuation, accounting and financial reporting . For companies in distressed situations, we advise on crisis avoidance, financial and operational restructuring and bankruptcy. 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, PwC deploys experienced teams with deep industry and local-market knowledge, and technical experience tailored to each client's situation. Our field-proven, globally consistent, controlled deal process helps 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.

About the PwC Network

PwC network firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 161,000 people in 154 countries across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See www.pwc.com for more information.

© 2011 PwC.  All rights reserved. "PwC" and "PwC US" refers to PricewaterhouseCoopers LLP, a Delaware limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate and independent legal entity.

SOURCE PwC