August 5, 2008
Ernst & Young US IPO Pipeline Report Shows Increased New Registrants Despite Turbulent Market
NEW YORK, Aug. 5 /PRNewswire/ -- While the IPO pipeline shows an increase in companies filing to go public, only 80 companies remained in the IPO pipeline by the end of the second quarter (30 June, 2008), according to the quarterly Ernst & Young US IPO Pipeline Report. Registrations are down from 90 companies at the end of the first quarter (31 March, 2008). Despite the smaller pipeline, Q2 2008 saw 30 new registrants filing to go public, compared to 23 in Q1 2008 and 24 in Q4 2007.
Of those that were removed from the pipeline in Q2, 19 companies withdrew or postponed their offerings, 12 were removed after sitting in the pipeline for over a year and nine companies reached the public markets. Companies in the current pipeline seek to raise $15.5 billion, down from $17.3 billion at the end of the first quarter.
The New York Stock Exchange remained one of the top three exchanges worldwide, raising 11% of global capital and launching two of the top 10 deals for the quarter (American Water and Intrepid Potash -- both US-domiciled, as well).
"Many factors -- from high market volatility, the slowdown in the world economy, sustained high oil prices and overall uncertainty -- all combined to weaken the IPO pipeline for the second quarter," said Maria Pinelli, Americas Director, Strategic Growth Markets, Ernst & Young LLP. "Market performance needs to stabilize for at least a quarter before we hope to see stronger IPO pipeline activity."
The overall IPO pipeline looks particularly pale in comparison to the market last year at this time.
IPO Pipeline Comparison: Time Period # of Deals Dollar Amounts Average Deal Size End of Q2 2007 97 $18.2 billion $ 187.3 million End of Q2 2008 80 $15.5 billion $ 193.3 million
According to Jackie Brya Kelley, Americas IPO Leader, Ernst & Young LLP, the average amount of time companies wait in the pipeline has nearly doubled over the past year. "On average, IPOs now in the pipeline have remained there for 170 days," said Brya Kelley. "Last year at this time, IPOs waited in the pipeline just 98 days on average."
Technology (22 companies) and biotechnology (13 companies) are still the leading sectors in the current pipeline, though these two industries also represented the most withdrawals. The four asset management companies in the pipeline combined seek to raise the most of any sector with $2.5 billion.
California remained the most active state with 16 filings representing 20% of IPOs in Q2 2008. New York had the highest capital totaling $2.6 billion with only 4 filings, and represented 17% of IPO capital being raised this quarter.
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