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Ernst & Young: U.S. IPO Calendar is Light for Q4

By Rob Starr, Content Manager,

A recent string of strong earnings reports could add a few deals to the pipeline before the end of 2012.  However, with only one effective IPO so far this month, the largest commercial REIT in history being acquired, and five companies withdrawing their offerings in late November, December is on track to have its slowest month since 2008, according to Ernst & Young’s U.S. IPO Pipeline Analysis.

The year got off to a good start in Q1, but momentum shifted over Q2 and Q3 due to persistent economic uncertainty, May Eurozone turmoil, slower growth in emerging markets, a looming fiscal cliff and leadership changes in both the U.S. and China. After two declining quarters, Q4 brought an IPO rebound with 30 transactions, an increase from 26 in Q3. Four IPOs seeking approximately $985 million in proceeds are scheduled to price in coming weeks. October stood out as the busiest month of 2012 raising the most proceeds with 21 IPOs and more than $6 billion in capital.

Private equity has remained stable amidst corporate decline and saw a considerable improvement in exits, both through M&A and IPO. PE firms are sitting on more than $360 billion in “dry powder” to deploy, but there is a shortage of quality assets and a noticeable gap between buyer and seller price expectations, which have constrained activity. As a result, buyout firms have struggled to attain a consistent level of activity. Fundraising has been fairly active in 2012, and PE activity is expected to continue momentum and remain consistent with 2012.

Similar to 2011, the top three sectors for IPO companies in 2012 are Technology, Oil & Gas and Life Sciences. This is also true for Emerging Growth Companies. These sectors will continue to lead the IPO market in the first half of 2013. As the U.S. housing market continues to see recovery, the Real Estate sector is expected to rebound. There are currently 18 Real Estate IPOs in the pipeline seeking to raise more than $12 billion in capital. The S&P Case-Shiller Home Price Index has been on the rise since January 2012.

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