IPO Pipeline surges to highest level since 2007, according to Ernst & Young LLP
New York, 26 October 2010 –The IPO pipeline reached a total of 133 companies in registration by the end of Q3 2010, representing 19% growth over the Q2 2010 total of 112, according to the quarterly Ernst & Young LLP US IPO Pipeline study. Total dollars also grew to $26.4 billion, a quarterly increase of 4%.
Average deal size decreased by 12% to $198 million, showing stronger interest from smaller companies in going public. Also for Q3, 70 registrants are seeking $100 million or less, compared to 59 registrations at that level for Q2.
Nineteen of the companies registered to go public in the US are from foreign countries – mostly China. Interestingly, all 16 of the China-based companies in the pipeline filed to raise $100 million or less. Ten of these companies are new registrants in Q3.
“We saw a surge in international registrations this quarter, especially from Chinese companies,” says Maria Pinelli, Americas Director, Strategic Growth Markets, Ernst & Young LLP. “There are currently 16 China-based registrations in industries as varied as mining, education, consumer products and business services – quite a change from the usually technology-heavy Chinese registrations.”
Year over year IPO Pipeline comparison:
|Time Period||# of companies in the Pipeline||Total dollar amount in the Pipeline||Average deal size in the Pipeline||# of US IPOs that went public in the quarter|
|End of Q3 2007||151||$30.4 billion||$201.5 million||26|
|End of Q3 2008||79||$17.6 billion||$231.4 million||4|
|End of Q3 2009||34||$10.9 billion||$321.6 million||14|
|End of Q3 2010||133||$26.6 billion||$199.8 million||33|
“Private equity and venture capital firms are looking to exit their investments in droves, and a public offering is one of their top considerations,” says Jackie Kelley, Americas IPO Leader, Ernst & Young LLP. “Therefore, it’s no surprise that nine of the top 10 deals in the pipeline are backed by private equity funds.”
Technology led the number of companies in the pipeline with 21 registrations. The technology industry also had 11 effective IPOs. Two of the three largest deals that went effective last quarter (SMART Technologies Inc. and KASLION Acquisition B.V.) were tech companies. Technology companies in the pipeline seek a total of $2.8 billion, for an average deal size of $132.6 million.
Among other industries, the pipeline includes 19 professional services companies (seeking $2.7 billion) and 16 pharmaceutical companies (seeking $1.6 billion).
Regionally, California continues to lead deal volume with 23 companies seeking $2.4 billion, followed by Massachusetts and Texas, both with nine companies seeking $1.8 billion.
The Ernst & Young LLP U.S. IPO Pipeline analysis 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 – long-term applicants that may bloat numbers, but don't reflect current market trends.
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, or follow news on Twitter at EYSGM.
About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 141,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.
For more information, please visit www.ey.com
Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.
This news release has been issued by Ernst & Young LLP, a US client-serving member firm of Ernst & Young Global Limited.