Ernst & Young LLP quarterly IPO Pipeline report shows the most new registrants in two years
IPO activity increases sharply in active fourth quarter New York, 29 January 2010- Activity in the IPO pipeline reached a two-year record in the fourth quarter of 2009, meeting pre-recession levels with 53 companies entering into registration, 30 IPOs launched and the overall pipeline increasing to 54 registrants seeking to raise $10.3 billion, according to the Ernst & Young LLP US IPO Pipeline study. This activity jumped from the previous quarter, which showed some momentum with 30 new registrants, 14 companies that went public and a resulting pipeline of 34 registrants.
The number of companies in the IPO Pipeline increased by 59 percent compared to the third quarter of 2009. Fourth quarter registrants, however, sought less than the $10.9 billion represented at the end of the third quarter.
Many of the 53 new registrants entering the pipeline in Q4 were smaller companies; 24 companies sought deal sizes of $100 million or less. Ten of the new registrants went public within the same quarter, contributing to the high turnover in the pipeline.
“The resurgence of entrepreneurial companies in the pipeline is reminiscent of the pre-recession IPO market,” says Maria Pinelli, Ernst & Young LLP, Americas Director, Strategic Growth Markets. “Emerging companies should take advantage of the current market to fund their growth strategies.”
Year over year IPO Pipeline comparison:
| Time Period | # of Deals | Dollar Amount | Average Deal |
| End of Q4 2007 | 90 | $16.8 billion | $186.7 million |
| End of Q4 2008 | 57 | $15.5 billion | $186.7 million |
| End of Q4 2009 | 54 | $10.3 billion | $272.7 million |
“Finally, the markets are opening up to represent their historic diversity – a range of deal sizes, pre-recession averaging at about $190 million, and a variety of industries led by technology,” saysJackie Kelley, Ernst & Young LLP, Americas IPO Leader. “Although strong companies can access the public markets most of the time, this quarter represents a return to normalcy for the average players. The next few months are shaping up to be a key period of activity.”
Regionally, the West was most active with 21 companies in registration to raise $3.6 billion. The Southwest sought $2.4 billion, while the Midwest sought $1.2 billion, each with five companies in registration. California had the highest level of activity among the states with 18 companies in registration, followed by Texas and Georgia with three each.
International companies continued to seek the US capital markets, as well. The Netherlands, China, the Cayman Islands and Thailand were all represented in the pipeline. China had four companies in the pipeline seeking a total of $166.3 million.
The Ernst & Young LLP U.S. IPO Pipeline Report is issued quarterly as a forward-looking indicator of the IPO market. The IPO Pipeline data is refined to eliminate bias from financial services organizations, real estate investment trusts and other holding companies that represent assets under management instead of core businesses. It also eliminates any registrants sitting on the books for more than 12 months.
About Ernst & Young’s Strategic Growth Markets Practice
Ernst & Young LLP’s Strategic Growth Markets (SGM) practice guides leading high-growth companies. Our multi-disciplinary team of elite professionals provides perspective and advice to help our clients accelerate market leadership. SGM delivers assurance, tax, transactions and advisory services to thousands of companies spanning all industries. Ernst & Young is the undisputed leader in taking companies public, advising key government agencies on the issues impacting high-growth companies and convening the experts who shape the business climate. For more information, please visit us at www.ey.com/us/strategicgrowthmarkets.
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