The U.S. IPO market this year has reached a 14-year high in proceeds raised, according to a new report.
In addition, 288 companies made their public debuts this year as of Dec. 4, up from 238 IPOs for all of 2013 and representing the most active environment for new offerings since 2007.
The latest quarterly IPO Watch, published Tuesday by PwC US, reported that IPOs raised a total of $83.9 billion, a 47% increase over the amount raised in 2013, and close to the $92.6 billion raised in 2000.
Mid-October volatility caused the IPO market to moderate slightly in the fourth quarter before it regained ground in November.
For the quarter as of Dec. 4, there were 60 public listings representing $13.4 billion in proceeds, compared with 77 public company debuts with a value of $24 billion in proceeds in the 2013 fourth quarter, ended Dec. 31.
The 2014 year-to-date IPOs included 18 spin-off IPOs, a 38% increase over the 13 transactions last year.
“Capital markets activity surged in 2014, as U.S. companies took advantage of the continued low interest rate environment and strong investor appetite for higher return investments in new equity issues and high yield debt,” Henri Leveque, a partner in PwC’s deals practice, said in a statement.
Healthcare dominated total IPO volume, accounting for 39% of total IPO volume for all of 2014, the report said.
On a total proceeds basis, technology was the top industry in 2014, driven by Alibaba’s $31.5 debut.
During the fourth quarter, the REIT sector led in value with $2.9 billion in IPO proceeds with just three offerings, capturing 71% of the IPO value in the financial services sector.
“Given positive economic forecasts for the U.S. and continued strength in corporate earnings, the IPO markets remain a popular exit for financial sponsors, and provide newly public companies with a platform for liquidity and valuation,” Leveque said.
“Combined with a robust pipeline of upcoming IPOs and strong levels of interest from private companies driving filing activity, IPOs will likely continue to attract investor interest in 2015.”
IPO Watch reported that financial sponsors continued to take an opportunistic view of the open equity capital markets, and actively pursued IPOs and other exits of portfolio companies, backing 61% of IPO volume and 71% of value in 2014.
IPO aftermarket performance declined significantly this year, returning 11% year to date, slightly below the S&P 500, the report said.
As well, the average first day gains of the 60 IPOs that priced during the fourth quarter was 8%, down from the 21% first day gain for the IPOs that priced in the same quarter last year.
“While we are seeing high levels of interest for capital-raising activities, investors remain focused on businesses that have the processes and systems they’ll need to manage the obligations they’ll face as a public company,” Neil Dhar, a PwC deals practice partner, said in the statement.
As investors searched for yield, the high yield market also performed well in 2014, according to the report.
As of Dec. 4, there were 567 issuances worth $309.2 billion, slightly down from both 2013 and the record issuances seen in 2012.
“Given indications of tightening monetary policy and increased interest rates, management teams remain active in pursuing funding to refinance debt and further boost liquidity at current rates,” Dhar said.
“We expect the high yield market to remain active going into the New Year, supported in part by increasing levels of M&A.”