David A. Ethridge is Senior Vice President and Head of the Capital Markets Group at NYSE Euronext.
Prior to joining NYSE Euronext, Mr....
April showed us that the previously observed global IPO momentum from Q1 was no fluke; proceeds were up nearly 10% in April to $11.7B, the highest monthly total this year. Through this time last year, though, we had seen $65.8B in IPO proceeds raised globally so while the 2012 trend is strong, the numbers are not as overwhelmingly positive as this time in 2011.
Domestically, 19 companies raised $3.7B in proceeds in April, in line with a March that saw 22 companies raise $3.9B in proceeds. We were encouraged to see IPOs from a variety of sectors, including financials, tech, E&P and materials. IPO highlights included luxury lifestyle brand Tumi Holdings (up 47% in its first day of trading, see Carolyn Saacke's post) and network infrastructure solution provider Infoblox (up 33% in its first day of trading).
The pricing and performance of 2012’s IPOs have left us wondering what we will see next. Overall, pricing has been mixed YTD; 22% have priced below the range, 35% within the range and 43% below the range. Excluding tech deals though, only 11% have priced above the range, 44% within the range and 47% below the range. Tech IPOs have also outperformed after pricing, with a median performance YTD of 38%, while the median performance of all IPOs YTD is just over 12%. It will be interesting to see if the tech love affair will continue throughout the rest of year. (See Doug Chu’s blog for more on April’s tech IPOs) Outside of tech, one notable area of success has been consumer, where it appears that the combination of brand, growth and profits is leading to great IPO results for companies like Tumi and Annie’s Inc.
This could all be a moot point if the global markets do not cooperate. News has been mixed over the past month, especially as the Euro Zone continues to struggle with Spain. In the US, consumer confidence levels seem to be increasing, though unemployment remains a large concern as many fear hiring is beginning to slow. The Dow finished the month unchanged, while the VIX, a measure of uncertainty in the market, closed at 17.15, up from its March 30th close at 15.50, though well below a point that signals fear in the US market.
Will we see a similar pace in IPOs before the August break hits us? Or will the “sell in May and go away” trend hurt our summer IPO flow? It may be a little early but reason for some optimism happened away from Wall Street in Washington DC where the JOBS Act legislation was passed with strong bipartisan support. We were active in working with the IPO Task Force led by Kate Mitchell from Scale Ventures (former head of the NVCA –see her blog post on the legislation here) to get this legislation passed. It may not be perfect but there are notably positive elements to the legislation that will make it less burdensome and less costly to go public.
So we may not see the result in May, but excitement amongst the VCs is palpable and we could begin seeing companies benefit from it this summer. We’re hopeful to see more companies going public, raising primary capital and creating new jobs across the US (NYSE JOBS Act panel discussion here).