2019 Annual Capital Markets Watch

Markets reach record highs

US equity markets in 2019 benefited from strong investor interest, with the S&P and NASDAQ producing outsized returns of 29% and 35%. Driven by historically low unemployment, increases in employee wages and interest rate cuts, 2019 remained resilient against foreign trade wars and recession indicators that persisted from the prior year.


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2019 IPO market overview

The US IPO market had another strong year in 2019, with 196 IPOs pricing, representing an 8% decrease from the 2018 total of 214 IPOs - more of a testament to a very active 2018 than a slow 2019. There was a marked reduction in the number of foreign private issuers on US markets. An increased proportion of highly anticipated megadeals (IPOs >$1 billion) pushed proceeds up 4% to $56.3 billion, which is the highest annual proceeds for the past 5 years.

Megadeals (IPOs >$1 billion in proceeds) remained at 9 IPOs, but contributed significantly more proceeds of the $56.3 billion raised by US IPOs in 2019, rising to 38% of all proceeds. Megadeals were dominated by financial-sponsor backed companies. There is a strong pipeline of tech megadeal IPOs anticipated to enter the market in 2020.

US IPO's returned 31% for the year, outperforming the S&Ps return of 29%, but falling just short of the NASDAQ's 35% return. IPO returns significantly outperformed the broader equity markets in the first half of the year, but returns from investing in IPOs slowed in the second half of the year despite late fourth quarter gains made by Pharma & Life Sciences ("PLS") IPOs.

Sector breakdown

US IPOs were dominated by issuances from 3 sectors: Special Purpose Acquisition Companies (SPACs), Pharma and Life Sciences (PLS), and technology companies in the Technology, Media, and Telecommunications (TMT) sectors.

The number of SPACs continued to increase in 2019, and have jumped from 4% in 2013 to 30% in 2019 in terms of the total share of annual IPOs. SPACs lead in volume three out of four quarters in 2019, and looking forward, the surge in SPACs will likely translate into greater activity in deal markets as they fulfil their acquisition strategies.

Life Sciences IPOs continued to be popular with investors, with biotechnology and medical device companies featured prominently. Biotech IPOs typically were able to price during their Phase 1 and Phase 2 clinical trial stages.

The TMT sector, which consisted of almost only technology companies in 2019, produced just under half of total proceeds.

"Current economic trends and investor sentiment indicate that the IPO markets will continue to remain robust into the new year. However geopolitical announcements, US election results, and Fed policy decisions will need to be taken into account."

Daniel KlausnerManaging Director, Capital Markets Advisory Leader

Hot topic - Direct listings

Direct listings received notable market headlines in the last two years, with two major direct listings taking place on the NYSE along with one on the NASDAQ. Despite significant attention and the prospect of a less expensive offering (as no underwriters are involved), direct listings appeal to a unique subset of companies that benefit from public market liquidity and valuation, without raising dilutive capital from the investment community. Both issuers and investors are evaluating the suitability of a direct listing for their situation.


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There is continued optimism about the immediate future for the US IPO market. Stronger than anticipated macro-economic indicators, coupled with a backlog of IPOs could result in an uptick in issuances. Given that 2020 is an election year in the US, there may be a flurry of IPOs in the first half of the year, and with some lessons learned around the IPO process, IPOs may again provide strong competition to the broader indices.

The IPO markets in 2019 experienced notable volatility, particularly in the latter part of the year as investor sentiment became more cautious. This resulted in some valuation resets which is a testament to the efficiency of the public markets through price discovery and equity story & business model valuation. Current economic trends and investor sentiment indicate that the IPO markets will continue to remain robust into the new year. However geopolitical announcements, US election results, and Fed policy decisions will need to be taken into account.

The US economy faced serious challenges in 2019, including an escalating trade war with China and slower global economic growth. The US manufacturing sector fell into recession, restraining spending throughout the entire economy and causing the Fed to cut rates three times in the second half of the year. Given the challenging environment, real GDP growth for 2019 will likely slow to just 2.3%.

GDP growth is expected to slow further in 2020 as the challenges faced in 2019 persist into next year. Even if an interim trade deal with China is reached, trade policy uncertainty will remain elevated, which will continue to hold back business investment and threaten a more pronounced downturn. However, our baseline expectation is for the manufacturing sector in the US to exit recession before the end of 2020, and for the Fed to keep monetary policy reasonably accommodative so that economic growth will not slip too far below its trend rate of 2%.

Chris Benko
Managing Director, PwC Intelligence Organization Leader

Please note: IPOs with proceeds that are less than $25mm, best efforts offerings, oil and gas royalty trusts, business development companies, pricing on OTC Bulletin Board and OTC Pink Sheets are excluded from the above narrative.

Special thanks to Semir Krpo, David Krause, Niko Hahalis, Natalie Reale, and Mark Hammer for assisting in the drafting of this publication.

Contact us

David Ethridge

David Ethridge

IPO Services Co-Leader, PwC US

Daniel Klausner

Daniel Klausner

Capital Markets Advisory Leader, Deals, PwC US

Derek Thomson

Derek Thomson

Capital Markets Research Leader, Deals, PwC US

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