The longest government shutdown in US history sent the US IPO markets into hibernation in the first two months of 2019, but IPO activity is rebounding quickly.
Based on our years of experience helping companies go public, we know IPO activity in Q1 tends to vary from year to year. This year, as we wrapped up 2018 and ushered in the new year, the US federal government shutdown compounded these issues and we saw just 22 IPOs raising proceeds of US$5.0b in Q1 2019, down 52% and 71% respectively, compared to Q1 2018.
But after an uncertain couple of months and the end of the shutdown in March, the markets began to recover – and quickly. And as the first wave of several expected unicorn issuers hit the market, the technology sector represented 48% of the IPO proceeds raised in the quarter.
Could 2019 be the hottest year for IPOs we’ve seen in decades?
Looking to Q2, we’re seeing a healthy pipeline of IPO candidates, including a number of unicorns rumored to be ready to go public. And we expect IPO activity to accelerate as the year continues.
While market volatility caused foreign issuers to postpone their listings early this year, with only five cross-border IPOs having listed in the US in Q1 2019 compared to 15 companies in Q1 2018, we anticipate renewed confidence and increased activity as the year continues. We also saw activity from sponsor-backed issuers decline at a greater rate than the overall market in the first quarter, but we don’t expect this trend to persist as issuance stabilizes.
Although there is limited visibility into the IPO pipeline due to confidential filings, there continues to be rumblings of significant IPO activity set to take place during Q2 and the second half of 2019.
Despite the SEC closure during the US government shutdown, many companies didn’t halt their IPO preparations and are now poised to access the market in the coming months. Significant attention is focused on big name unicorns expected to complete IPOs, but conditions are ripe for issuers of all sizes and there is potential for significant activity in Q2 2019 and beyond.