Emerging growth companies account for 77 percent of total IPOs in quarter
IPOs in the US rose sharply in the second quarter of this year, led by a surge in offerings under the Jumpstart Our Business Startups (JOBS) Act, amid increasing optimism over the economic recovery, according to research by PwC.
The number of IPOs in the second quarter jumped to 62, an increase of 82 percent on the 34 listings in the first quarter of 2013 and 88 percent up on the 33 listings in the second quarter of 2012, PwC says. Proceeds raised totaled $13.1 bn in the second quarter, a gain of 68 percent from the first quarter. Excluding the $16 bn Facebook IPO in the second quarter of last year, proceeds have risen by 111 percent.
‘IPO activity rose substantially during the second quarter, bolstered by early gains in a strong, albeit volatile, equity market, and an increased appetite for risk among investors,’ Henri Leveque, leader of PwC’s US capital markets and accounting advisory services, says in a press release. ’We are also continuing to see a broadening of sectors represented in the IPO market, especially growth-related offerings in sectors that are well positioned to capitalize on a recovering economy.’
For the entire first half of 2013, the number of IPOs rose by 23 percent on the same period last year, to 96 from 78, while proceeds increased to $20.9 bn from $12 bn, again excluding the Facebook IPO, according to PwC.
IPOs launched by emerging growth companies eligible to benefit from the JOBS Act, which took effect in April last year to loosen transparency rules for smaller firms, accounted for 77 percent of the total in the second quarter, or 48 of the 62 IPOs. PwC says 79 percent of those companies (38 firms in total) took advantage of the JOBS Act’s confidential filing provision, and ‘PwC expects this trend to increase throughout 2013.’
Increased risk appetite and gains in stock ‘combined with the increase in IPO readiness activity that we are seeing and the increasing number of issuers filing confidentially as emerging growth companies, lead us to remain optimistic about the health of the US IPO market for the remainder of 2013,’ Leveque says.
The number of companies that publicly began the IPO registration process in the second quarter surged 129 percent to 80, from 35 in the same quarter last year, indicating a likely increase in actual IPOs in coming quarters. The real number of IPOs in the pipeline is likely much higher but unreported due to JOBS ACT confidential filing provisions, PwC says.