Biotechnology and tech stocks drove the US initial public offering (IPO) market to a 14-year high in 2014 against a mostly low-volatility backdrop according to Renaissance Capital's 2014 US IPO Annual Review.
Renaissance Capital noted this year saw 273 IPOs, making it the most active period of issuance since 406 companies went public in 2000. It was the second year of uninterrupted IPO activity, up 23% over 2013, due to a doubling of biotech issuance, it adds.
2015 is set for another solid IPO year as a "healthy pipeline and still-positive US economic backdrop should support another year with more than 200 IPOs," says Renaissance Capital. It notes its Private Company Watchlist has grown to 255 companies.
This, it says, includes 36 that are known to have either confidentially filed or selected banks for an IPO. "Technology companies account for more than 80% of the list and include some familiar names like Uber, Airbnb, Spotify and Dropbox."
Renaissance Capital adds GoDaddy, Box, and Good Technology all submitted initial filings in the first half of 2014 but decided to delay to 2015 during periods of volatility for tech stocks.
"The IPO backlog has also been supported by an active year of private fundraising, and well-known tech companies like Spotify and Uber may initiate offerings." It notes 2015 holds challenges, but next year has the "potential to create another post-2000 record".
Billions in proceeds
This year, bourse debuts brought in proceeds of $85 billion, inflated by Alibaba's $22 billion offering, which led to an overall 55% gain over 2013, says Renaissance Capital. "While various global events, such as Russia's incursion into the Ukraine and conflicts in the Middle East, caused nervousness in global markets, they largely failed to disrupt the US IPO applecart."
Of the listings last year, technology accounted for about a fifth, with 22% more debuts than in 2013 at 55, while 69 biotech companies took to the bourse for the first time, representing a quarter of all debuts, Renaissance Capital's research shows.
On average, all initial offerings gained 16% this year, which was close to the ten-year mean, but well below the 41% average return in 2013. Alibaba's $22 billion IPO brought technology to the top of the proceeds list, but even without it, tech proceeds would have surpassed last year by 33%, adds Renaissance Capital.
With seven billion-dollar IPOs, financial industry proceeds were up 82% from last year, although the number of offerings fell by 20% to 36, still above historical levels, while energy IPOs reached a new record with over $12 billion in proceeds, notes Renaissance Capital. Consumer IPOs raised about one-third the proceeds of last year, when Hilton, Coty and SeaWorld generated more than $4 billion.
Eleven IPOs raised at least $1 billion, the most in any year since 2001, and four more than in 2013. The ten largest raised 47% of the year's total proceeds, with Alibaba representing 26% of the overall total.
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