Press release

Q1 14 US IPO Activity Doubled from Q1 13

New York, 26 March, 2014

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  • Pharmaceuticals Dominated Flourishing U.S. IPO Market in First Quarter
  • Investors Focused on US Companies Innovating for Growth Long Term
  • US Exchanges Lead Global Capital Markets with Number of Deals and Capital Raised

The U.S. IPO market experienced a booming first quarter, and pharmaceutical companies are leading the way with 23 deals thus far. According to EY’s Global IPO update– 68 IPOs have gone effective in Q1, raising approximately $11.6 billion in proceeds. The EY U.S. IPO Pipeline Analysis indicates a surge in companies getting in line to go public with 25 new registrations entering thus far in March.i

While still interested in key core sectors such as Technology and energy, investors, buoyed by strengthening capital markets, have turned their attention to health care and life sciences sectors that are typically fueled by long-term innovation-related investments carrying higher risk/reward. This trend will continue to gain steam as pharmaceutical companies secure positions as top players around innovative new models in specialized care areas.

As market appetite increases, investors are also continuing to foster disruptive technology companies. The technology sector will experience a second wave of land grabs as companies and investors alike are looking to fill gaps in smart mobility, cloud computing, social networking, big data analytics and accelerated technology adaptation.

“After years of consolidation, the US markets are entering a period of rapid growth, in turn investor’s sense the market appetite is there to make land grabs for disruptive technologies and innovative companies,” said Jackie Kelley, EY Global IPO Leader. “Investors seeking out companies that are looking to innovate for long term growth are definitely the sign of a strong IPO market. Health care, pharmaceuticals, biotech, technology, and energy companies in particular will drive deal activity, for the remainder of 2014.”

The Q1 Review:

The US market saw a 106% increase in IPOs from Q1 14 versus Q1 13. 83 new registrations entered into the public IPO pipeline through March 18, 2014. The US exchanges also lead the global capital markets, with each of the US main exchanges taking a top position either in number of deals or amount of capital raised. Unsurprisingly, U.S. domiciled companies accounted for 84% or 57 of total IPO listings, driven by strong activity in the Northeast. The remaining 11 deals were cross-border listings originating from Israel, Canada, Chile, Denmark, the Netherlands, Norway, Ireland and Hong Kong. These countries, with the exception of Israel, saw an IPO listing on the US exchanges for the first time since July 2013. 

The health care sector followed up its Q4 go to market lead by continuing momentum with 35 or 51% of the IPOs in Q1, 23 of which were pharmaceuticals companies, biotech and equipment companies followed with seven and five IPOs, respectively. This sector will continue to push out IPOs as for the most part they are smaller offerings and limit the risk exposure to investors’ portfolios. January was also a strong month for the Energy sector with five IPOs going effective early in the year, taking advantage of the remaining open window from 2013. 

A further breakdown of the 95 IPOs currently in the pipeline by sector shows that:

  • 23 are in Health Care, raising $2.0 billion
  • 13 are in Financial Services, raising $1.4 billion
  • 12 are in Real Estate, raising $5.9 billion 
  • 12 are in Technology, raising $2.5 billion
  • 7 are in Retail & Wholesale, raising $1.9 billion
  • 5 are in Oil & Gas, raising $2.1 billion

IPO Forecast-Looking Ahead:

Investor sentiment remains very positive due to the fact that IPO performance has exceeded other key market indices like the S&P 500 which hit a record high in Q1 and the VIX Index-which also fuels investor appetite- has remained under 20. Strong IPO returns have enabled investors-who are actively managing their portfolios- to reinvest in the market and in new disruptive companies.

“We expect continued momentum in Q2, with a steady flow of health care, technology and energy companies in the pipeline,” continued Kelley.  “Health care companies will likely be smaller offerings pricing in the low to mid-range while some of the more disruptive technology/consumer cross-over companies coming to market addressing cloud, SAAS, big data, and social media will be intensely focused on which sector to list under in order to maximize valuations. Technology companies are being challenged to show growth through multiple revenue streams, which may cross sector as well as geography, in order to make the leap.”

Though the market will continue to be dominated with offerings in the lower range-IPOs poised to go out under $100 million will be the norm- some big Chinese companies are flocking to the American market in record numbers to take advantage of large investor base and more suitable listing requirements. The e-commerce giant, Alibaba, recently announced it’s coming to a US stock exchange. Alibaba's value could reach as much as $200 billion, which would make it the second largest internet company behind Google. Last year, Alibaba bought an 18% stake in microblog Weibo, China’s version of Twitter, which recently filed their IPO with an offering of $500 million.  This is confirmation that the number of international listings is increasing.

“As a consumer-driven technology company, Alibaba is a perfect example of the blurring we continue to see between the technology and consumer products sectors,” continued Kelley. “It’s so important to be prepared to make the right choice on which sector to list under as it will ultimately effect the valuations companies that ‘blur’ will see.” 

VC and PE-Backed IPOs

Both VC and PE backed companies continued to gain traction with the US markets. In fact, the US was the most active market for VC-backed IPOs in 2013. So far this year, the number of VC-backed IPOs were more than quadruple with 36 IPOs compared to 8 in Q1 last year. The health care and technology sectors accounted for almost all the VC-backed IPOs. The amount raised this quarter also increased slightly to $3.7 billion from $3.5 billion in Q4 2013, excluding Twitter’s $2.1 billion offer.

PE firms have played an increasingly important role in the US IPO markets. Having ushered their portfolio companies through the worst of the recession, PE firms are now availing themselves of the open IPO window to achieve liquidity for their LPs. In 2013, PE-backed IPOs in the US saw their most active year on record. In Q1 2014, 27 PE backed IPOs raised $8.2 billion in proceeds. Both deal volume and value pulled back from last quarter, but went up significantly compared to the same quarter a year ago. Perhaps most importantly, the pipeline looks strong. Currently there are over 38 sponsored IPOs in registration to go public on US exchanges. In the aggregate; they could raise more than $7.8 billion.

Year-over-year pipeline comparison chart:


Time period


# of companies in the Pipeline

Total dollar amount in the Pipeline $bn


Average deal size in the Pipeline $mm

# of U.S. IPOs that went public in the quarter

Q1 2012





Q1 2013





Q1 2014 as of March 18, 2014





Q1 2014 figures are as of Mar 18, 2014. Number of IPOs that went public is projection for the quarter

Notes to editors

All Data sourced from Dealogic.

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i Data is based on Deal Logic closed March 18, 2014