Financial sponsor-backed IPOs drive second quarter activity, representing 60% of US IPO value and volume
Financial services and technology continue to be the most active industries
NEW YORK, Aug. 07, 2007 – Second quarter IPO activity continued to build on the momentum from the first quarter raising more than $21.0 billion via 71 IPOs. This is the highest second quarter in terms of volume and value since 2000 when 98 IPOs raised $33.3 billion. Driving second quarter activity was financial sponsor-backed IPOs which contributed over half of the quarter's IPOs and generated more than 60% of total proceeds. The Blackstone IPO, the largest offering, contributed 20% or $4.1 billion to total value.
“After a robust first and second quarter, first half results surpassed those of 2006, representing 56% and 65% of total 2006 volume and value," said Scott Gehsmann, a capital markets partner in PricewaterhouseCoopers' Transaction Services group. "Financial sponsor-backed IPOs continued to increase their presence as they harvest their investments and raise capital using public vehicles," Gehsmann added.
The five largest deals, each with proceeds north of $1 billion, accounted for 46% of total proceeds. This is a huge jump from 1Q 2007 when the top five accounted for 34% of value and a slight increase from 41% in 2Q 2006. Two of the top five offerings were financial sponsor-backed, representing 25% of the second quarter's proceeds.
The top 10 IPOs contributed 61% of total dollars raised. The proceeds raised by the top 10 IPOs nearly doubled that of 2Q 2006. Driving the increase was the Blackstone IPO which generated $4.1 billion or 32% of the total value raised by the top 10. The industry mix of the top 10 differed significantly from that of the prior year, where the dominant industries were consumer and energy. Continuing the industry mix from 1Q 2007, the most active industries in 2Q 2007 were financial services with four IPOs and technology with three.
Technology/infocom, financial services and healthcare continued to be the most active industries in the second quarter of 2007, continuing the theme from the first quarter.
Technology/infocom proceeds driven by semiconductor and communications. Eighteen IPOs raised $4.3 billion, of which six semiconductor IPOs generated $1.2 billion and four communications offerings raised $1.6 billion.
Financial services led in total proceeds raise. Financial services accounted for 46% or $9.7 billion of total proceeds, a slight increase from the 43% contribution in 1Q 2007 and a huge leap from 19% in 2Q 2006. The Blackstone IPO contributed nearly half of the industry total. Seven of the 16 IPOs were special purpose acquisition vehicles (SPACs) or "blank check" companies that together raised over $1.0 billion on the AMEX. When this amount was added to the $952 million raised in 1Q 2007, these companies amassed $2.1 billion in proceeds during the first half of 2007, a 109% increase from same period last year when $1.0 billion was raised.
Financial sponsor-backed IPOs increase their presence. After completing 26 of the total 64 IPOs in 1Q 2007, the second quarter saw 43 financial sponsor-backed IPOs raising an aggregate of $12.7 billion or 60% of the quarter's proceeds. The 2Q amounts were up significantly from the 21 IPOs and $5.2 billion in 2Q 2006. Financial sponsors backed 13 healthcare ($1.5 billion) and 13 technology/infocom ($3.9 billion) IPOs.
Foreign registrants more active in the second quarter. China was the most active non-US issuer. Non-US issuers were active in the second quarter listing 13 IPOs that raised $3.9 billion, a sharp increase from the five IPOs that generated $837 million in 2Q 2006. Eight of the 13 IPOs were from China, with the remainder from Argentina, Greece, India, Israel and the Netherlands. The eight IPOs from China raised 39% or $1.5 billion of the total proceeds raised by non-US issuers. India's Sterlite Industries was the largest non-US issuer, raising $1.8 billion in proceeds on the New York Stock Exchange.
For the first six months of 2007, the number of listings by foreign registrants on US exchanges doubled that of the prior year. These registrants listed 22 IPOs raising $5.7 billion in 2007 compared with 11 IPOs amassing $3.7 billion in the first half of 2006.
NYSE leads in value while NASDAQ leads in volume. The NASDAQ continued to lead in IPO volume with 38 IPOs raising $5.8 billions. The NYSE with 23 IPOs led IPO value with $12.5 billion. The AMEX listed 10 IPOs raising $2.7 billion.
Strong first and second quarter IPO activity bode well for the second half of the year. Gehsmann notes that the IPO pipeline continues to be strong despite the recent turbulence in the debt markets. The return of foreign registrants is both a welcome and positive sign.
US IPO Watch is a quarterly survey of all IPOs listed on US exchanges. These include IPOs by domestic and foreign companies, best-efforts, business development companies, filings with the FDIC, and bank demutualizations. IPOs do not include unit investment trusts and fully classified closed-end funds. This survey captures IPOs listed between April 1 and June 30, 2007. Visit our website, www.pwc.com/ustransactionservices, for our 2004, 2005 and 2006 US IPO Watch reports.
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