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April 12, 2017 at 09:06 AM
This year’s U.S. IPO market is looking more robust than last year’s, when only 79 IPOs were priced, the lowest number since 2009, law firm Proskauer said in a new study released Wednesday.
Twenty IPOs were priced in the first quarter, compared with six in the 2016 first quarter, still a slower start than in recent years.
Brexit and the U.S. presidential election contributed to last year’s market slowness and volatility, the study said. The average base deal value was $214 million, the same as 2015, and the lowest since 2005.
Proskauer said the March 2 Snap IPO may lead the way to more big listings this year. IPO Boutique provides a current list of offerings in the pipeline.
2016 Trends and Activity
Proskauer analyzed 67 of the 79 IPOs from 2016 on its database that met requirements for inclusion in the study: listing on a U.S. exchange and a minimum initial base deal size of $50 million. Fifty-seven came from domestic issuers and 10 from foreign private issuers.
“We have expanded and enhanced the proprietary IPO database that we created for the first edition through analyses for more than 375 IPOs,” Pippa Bond, co-head of Proskauer’s global capital markets group, said in a statement.
The new study turned up several observations about 2016 listings.
For one, the market has become more accepting of less financial information, Proskauer found.
In the nearly five years since the passage of the Jumpstart Our Business Startups (JOBS) Act, 75% of emerging growth companies (generally, those with annual revenues under $1 billion) included two instead of three years of audited financial statements in 2016, a 92% increase since 2013.
In addition, 60% of emerging companies included only two years of selected financial statements last year, a 67% increase since 2013.
Although underwriters and issuers have increasingly used pre-IPO test-the-waters communications to obtain feedback from potential investors, the study showed that these have been deployed predominantly by the issuers in the health care and technology, media and telecom sectors.
In 2016, 100% of disclosed testing-the-waters communications were by issuers in these sectors.
