PwC: IPO Market Sees Pullback

By Rob Starr, Content Manager, Big4.com

According to PwC US, the number of IPO pricings slowed in mid-May.  Despite a slowdown in IPO pricings, the registration pipeline remains at high levels and there is optimism that pricing activity will return as some of these concerns are resolved, according to IPO Watch a quarterly and annual survey of IPOs listed on U.S. stock exchanges by PwC.

Excluding Facebook, second quarter IPOs raised total proceeds of $5.2 billion, at an average value of $200 million per IPO, representing an increase of 53 percent over the first quarter average IPO size of $131 million.  Total proceeds, excluding Facebook, were only 10 percent less than the first quarter of 2012, illustrating the strength of the IPO markets earlier in the quarter.  Continuing on the positive IPO pricing trends of the first quarter, IPOs in the second quarter produced an un-weighted average return of 8 percent since IPO date, which again exceeded the S&P500 quarterly loss of 6 percent.

Financial sponsors continued their history of strong presence in U.S. IPOs, backing 70 percent of IPOs in the second quarter of 2012 and generating 90 percent of total proceeds.  This high level of sponsor involvement remains consistent with the comparable quarter in 2011 which also saw two-thirds of the quarter’s IPOs backed by financial sponsors, representing 74 percent of proceeds.