US IPO market boasts more than 90 effective IPOs in Q2

The U.S. IPO market continued to flourish in Q2, with 91 IPOs both effective and projected, turning in the strongest quarter over the last decade and the third consecutive quarter where more than 70 IPOs went effective.

According to EY’s U.S. IPO Pipeline Analysis, 91 IPOs have gone effective in Q2, raising about $23.1 billion in proceeds; 47 percent more than the 62 IPOs from the same quarter a year ago and more than 20 over last quarter. Proceeds raised this quarter have surpassed last quarter’s $11.9 billion and $14.8 billion in the same quarter a year ago.

“New IPOs continue to fuel a strong pipeline this quarter as capital is readily available,” says Jackie Kelley, EY’s global IPO leader. “PE and VCs are driving IPOs as they seize the opportunity to realize value for investors, confidence continues to build as the VIX® is now at the lowest level since the start of 2007, and with M&A hot again, companies have more options to exit. Dual tracking has become popular again.”

Q2 Review:

It was another hot quarter for health care and technology — with both rising to the top as the most active industries due to favorable market conditions for VC/PE exits.

In the first half of 2014, almost three out of four health care and technology IPOs were either PE- or VC-backed — that is, 45 out of 63 health care IPOs and 24 out of 32 technology IPOs.

Rounding out the top five sectors are the oil and gas, financial services and retail industries. In terms of proceeds, technology and oil and gas raised the most capital among all industries.


Technology companies over the last five years have been streamlining operations, developing cash positive business models and throwing off cash. Debt markets have been friendly and innovation around the cloud, and mobile is driving a lot of activity.

The health care and life sciences industries have exploded recently with companies looking to become more specialized, thus narrowing their areas of focus — a trend expected to continue for the foreseeable future.

In financial services, smaller regional financial institutions and insurance companies found opportunities to raise capital. Oil and gas IPOs continue to be driven by limited partnerships.

A further breakdown of the 87 IPOs currently in the pipeline by sector:

  •  34 are in health care, raising $1.9 billion.
  • 18 are in financial services, raising $0.7 billion.
  • 8 are in technology, raising $0.8 billion.
  • 4 are in oil and gas, raising $2.1 billion.
  • 4 are in professional services, raising $1.1 billion.
  • 4 are in utilities, raising $1.3 billion.

Cross-border is back:

U.S. exchanges continue to be the most attractive in the world and have dominated the market with 91 IPOs and $23.1 billion in proceeds. The proceeds were twice more than the second busiest exchange of London.

Valuation was less favorable compared to the first quarter as investors exhibited signs of caution on whether or not the uptrend in the equity markets is sustainable. Only three U.S. domiciled companies listed outside of the U.S. for the first half of 2014 including Margaritaville in Jamaica; Acucela Inc. in Japan and e-TeleQuote in the U.K.

“This quarter saw a comeback of cross border listings reaching their highest level since 2007,” Kelley says. “Ten Greater Chinese firms listed on U.S. exchanges, raising more than $3.5 billion compared to only one in the first quarter. Eight of the 11, or 73 percent, of companies listing on U.S. exchanges are technology or Internet-based companies.”

The China Securities Regulatory Commission recently announced it would limit IPOs in China to about 100 in the second half of the year, which could encourage even more of the 700 Chinese firms in the IPO pipeline to consider a cross border listing.

Other countries listing on U.S. exchanges in 1H 2014:

  • U.K. five deals, $2.7 billion.
  • Israel three deals, $200 million.
  • Canada three deals, $400 million.

VC and PE-backed IPOs

PE and VC account for 60 percent of US IPOs with 54 deals and $18.3 billion in proceeds.

The two top PE-backed IPOs were Ally Financial and IMS Health. VC-backed IPO volume dropped in the second quarter compared to Q1. Proceeds of $4.8 billion surpassed both Q1 and the second quarter of 2013.

Forty-one of the IPOs in today’s 87-company pipeline are PE/VC-backed, which is more typical of historical trends. The market will continue to see PE/VC exits in the foreseeable future.


*Q2 2014 figures are as of June 17, 2014. Number of IPOs that went public is projection for the quarter.

“We’re expecting the IPO market to remain hot as new IPOs continue to fuel the pipeline,” Kelley says. “As the Federal Reserve has focused on keeping rates low and the tapering strategy will remain unchanged, barring any impact from geopolitical shock, we expect this to be a banner year reaching levels we have not seen since 2004.”