IPO Market Conditions Improving – Indications of a Robust Q1 2012?

 

NEW YORK, NY - JANUARY 26:  A woman walks past...

 

As the end of the year holiday season approaches, I thought it would be interesting to provide some quantitative and qualitative observations on the state of the new issue (IPO) markets and how things have changed since summertime.

Quantitative

Market conditions (supply/demand factors for IPOs) have improved markedly since late summer

  • S&P 500 up 12% since August  lows (8/22/11 to 12/2/11)
  • VIX below 30 (27.5 on 12/2), vs. over 40 for much of August
  • US IPO volume over the first 3 weeks of November exceeded that of the previous 3 months combined
  • US IPO backlog (see recent blog post here) still at historically high level with >200 companies filed
  • Monthly equity mutual fund flows turned positive (inflows) in November for the first time this year since April

Qualitative

  • IPO prep and pitch activity increasing, especially out here in Silicon Valley
  • Two recent NYSE tech IPOs performed extremely well, helping sentiment:
    • Imperva (11/8/11, $398mm mkt cap at pricing) is up 68% since pricing
    • Invensense (11/15/11, $595mm) is up 51% since pricing
  • I attended / presented at multiple “IPO Bootcamps” recently, including:  the 16th NYSE KPMG IPO Bootcamp in Palo Alto; Pillsbury’s 2011 Liquidity Summit in Menlo Park; Intel Capital’s CEO Summit IPO Workshop in Huntington Beach; and Etrade’s Forum for Private Companies in Palo Alto, CA.   Total draw:  400+

Anticipated pricings in next two weeks will bring sector diversity with pricings including luxury retail (Michael Kors), tech (Zynga), international specialty materials (Luxfer) and energy (Laredo Petroleum).  This is a healthy way to create positive sentiment as we roll into the new year.

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