Wall Street has seen some key records this year. While investors cheered the surge in benchmarks with S&P 500 (SPX) hitting 53 record highs so far, 2014 also became a record year for initial public offerings (IPOs). The u.s. IPO market was the biggest in 2014 since 2000 in terms of both value and number. The size was mostly boosted by the Chinese e-commerce behemoth Alibaba (BABA). The financial firms too raised significant funds – highest since 2008 – via IPOs in 2014. Meanwhile, Nasdaq was the most preferred option among U.S. exchanges for launching the IPOs.
However, the massive volume and proceeds did not translate into being the most profitable year. The average offering return was at 16% in 2014, significantly lower than 41% in 2013. However, the gain was better than the S&P's 12.6% return year to date. Separately, we have varying figures from Ernst & Young, which took 288 IPOs into account and stated that averaged return was 17.1% year to date.
275 Companies Launched IPO
According to IPO exchange-traded fund manager Renaissance Capital, so far 275 companies became publicly-traded on the U.S. exchanges and raised over $85 billion. Another report from Ernst & Young LLP notes that 288 IPOs this year raised $95.2 billion, up 54% from 2013. In fact, a report titled EY Global IPO Trends: 2014 Q4 also suggested that IPO activity globally was the best one since 2010.
IPO activity is said to be “uninterrupted” as the major global geopolitical and economic concerns failed to affect. Renaissance Capital stated: “While various global events, such as Russia's incursion into the Ukraine and conflicts in the Middle East, caused nervousness in global markets, they largely failed to disrupt the US IPO applecart.”
Global IPOs & Financial Sponsors
Globally, 1,206 IPOs raised $256.5billion in 2014, according to Ernst & Young. This marked a 35% increase in volume and 50% jump in value from 2013. Sectors trending on the global IPOs front were healthcare with 193 deals raising $21.8 billion, followed by Technology with 167 deals collecting $50.2 billion, and industrials accounting for 142 deals that attracted $19.9 billion.
Much of the global IPO market was dominated by financial sponsors. Ernst & Young analyst Maria Pinelli and others noted that financials dominated “as they took advantage of positive market sentiment, primarily in the U.S., mainland Europe, and UK, to dispose of assets acquired in the peak of the economic cycle in 2006-07.” Proceeds from 328 financial-sponsored IPOs jumped 86% from last year to $124 billion. This was about half of global IPOs by value.
