Although the IPO pace is off from last year’s sizzling levels, the number of companies completing IPOs on U.S. exchanges remains at heightened levels. In addition, the number of completed IPOs picked up as the year progressed, suggesting that IPO activity in the U.S. in the year’s second half will also be lively.
U.S. IPO activity in 2014 was at the highest levels in more than a decade, when there were a total of 275 U.S. IPOs (as discussed here). According to Renaissance Capital (here), through the first six months of 2015, there have been a total of 104 completed IPOs, which is well below the 147 completed in the first half of 2014 (representing a decline of 29%). However, other than when compared with 2014, the number of U.S. IPOs completed in the first half of 2015 is the first half total since 2004.
The pace of completed IPOs has picked up as 2015 has progressed. The number of U.S. IPOs completed in June 2015 was the highest monthly total since July 2014, and the number of IPOs completed during the week ending on June 25, 2015 was the highest weekly total since October 2014, as discussed here. Moreover, the market for IPOs appears to be quite healthy as we head into the year’s second half. Seres Therapeutics, which debuted during the week ending June 25, 2015 soared 186% on its first day of trading, the highest post-IPO pop since January 2014.
In general, the 2015 IPOs thus far have been raising lower proceeds than the IPOs in 2014. In the year’s first six months, the 2015 U.S. IPOs have raised $18.1 billion, compared to $31.4 billion in the first half of 2014, representing a decline of 42.3%, as discussed here.
There have been 138 IPO filings in the year’s first half, compared to 212 in the first half of 2014, representing a decline of 34%, as discussed here. However, the number of filings picked up late in the first half. The 39 filings in June 2015 was the highest monthly number of filings since June 2014. The number of deals in the pipeline suggests that we will have an active second half of 2015.
The sector with the highest number of IPOs so far this year has been the healthcare sector. Health care related IPOs have represented 44% of all 2015 IPOs. The closest sector in terms of IPO activity has been the technology sector, which has had 14% of 2015 IPOs.
As I have previously noted on this blog, among other things, IPO activity means IPO-related securities litigation. IPO-related securities suits were a big factor in the securities filings in the year’s first half (as discussed here), and it seems likely that even though IPO activity levels in 2015 are below last year’s levels, IPO-related securities litigation will remain a factor in the year’s second half and possibly even into next year.
M&A Activity at Elevated Levels as Well: IPO deals were not the only corporate transactions that were at elevated levels in the first half of 2015. According to a June 29, 2015 Reuters article (here), mergers and acquisitions (M&A) worldwide in the second quarter of 2015 almost matched the record set in the second quarter of 2007. According to the article, a number of large deals announced in second quarter drove M&A volumes globally in the second quarter of 2015 up by 34.6 percent year-on-year to $1.33 trillion as of June 26, shy of the record $1.41 trillion seen in the second quarter of 2007.
The difference from the 2007 activity is that many of the transactions then were driven by private equity firms in the for of leveraged buyouts; the deals this year are being driven by corporate decision-makers looking to execute on larger corporate strategies.
For those of us in the insurance industry, 2015 has been a banner year for M&A activity — to the point where you start to wonder, who’s next?