Initial public offerings are winding down, and most capital markets executives expect IPO activity in the more traditional retail and consumer sectors to remain flat for the rest of the calendar year, according to research firm BDO’s “IPO Halftime Report.”
For technology, biotech and health-care segments, IPOs remain red-hot. Overall, though, IPO activity across all sectors in the U.S. is softening. In the fashion apparel sector, IPOs in the e-commerce space have been robust.
“IPOs on U.S. exchanges finished the first half of the year with a flurry of activity,” the analysts said in the report. “In fact, the 33 offerings that priced in June represent the highest number of deals since July of last year. Yet, despite this strong finish, the number of U.S. IPOs and proceeds raised through six months are down significantly when compared to 2014.”
Of the bankers polled, 54 percent expect the second half of this year to see the same level of IPO activity as the first half.
“Bankers anticipate these offerings will average just $174 million in size for the remainder of 2015, approximately the same as the first half of the year,” the analysts noted. “This projects to less than $36 billion in total IPO proceeds on U.S. exchanges in 2015, the lowest level of proceeds since 2009, when the market was still reeling from the financial crisis.”
One major factor dragging down IPO activity is the availability of private equity money, which is allowing for start-ups to delay going public, the respondents said. Another factor cited is a cooling equities market — valuations, while still high, may have peaked.
Additionally, companies are delaying their IPOs “due to the widespread availability of late-stage financing in the private sector,” the analysts said. Also impacting the market is the fact that many private equity firms have already exited the mature businesses in their portfolios via an IPO.