Average first-day gain falls sharply in third quarter from year earlier period
The proceeds of initial public offerings (IPOs) in the US surged in the third quarter due to the Alibaba listing, even as the number of offerings was little changed from a year earlier, according to a study by PwC.
Proceeds raised totaled $38.1 bn in the third quarter of this year, compared with $11.8 bn in the same period of last year, PwC says in its IPO Watch report. At the same time, the number of IPOs rose only slightly, to 68 in the third quarter of 2014 from 64 in the same period last year.
The Alibaba IPO, which raised $21.8 bn on September 19, not including the overallotment exercise, represented nearly double the proceeds of all IPOs combined in the third quarter of 2013. Still, PwC says, third-quarter data from the US shows a high degree of investor interest.
‘We continued to see healthy capital markets activity during the third quarter, with ample funding alternatives available from IPOs to debt financings,’ Henri Leveque, leader of PwC’s US capital markets and accounting advisory services, says in the report. ‘The IPO market remains very active as companies seek to tap into investor appetite while the window is open.’
He said, though, that ‘while investors continue to pursue high growth opportunities, particularly in the technology and healthcare sectors, they are returning to a more selective approach to new offerings. Ongoing global geopolitical concerns and continued uncertainty regarding the direction of the worldwide economy have all fuelled a more cautious stance in the equity markets.’
The number of IPOs in the first nine months of the year climbed to 228 from 161 in the same period of last year while proceeds, also affected significantly by the Alibaba debut, more than doubled to $70.5 bn from $32.8 bn, PwC says.
The average first-day gain of the 68 IPOs in the third quarter of this year fell to 11.4 percent from the 20 percent recorded in the same quarter of 2013, according to PwC data. The performance, however, marked an improvement from the average first-day gain of 9.2 percent in the second quarter of this year.
