US IPO activity dwindles amid market uncertainty
The second quarter of 2008 witnessed the lowest level of IPO activity since 2003
NEW YORK, July 24, 2008 – After a robust year of IPO (initial public offering) activity in 2007, the number of listings in the United States (US) shrank in the first half of 2008. For the first six months of 2008, 42 IPOs raised $29.3 billion compared with 147 IPOs that amassed $32.8 billion for the same period last year. IPO volume (number of deals) for the first half of the year plunged more than 71 percent from the same period in 2007. While IPO value seemed relatively stable, the $17.9 billion VISA IPO skewed the amount of proceeds raised for the first half of 2008. Excluding the VISA IPO, the proceeds raised for the first half of 2008 were $11.4 billion, a third of the corresponding 2007 amount.
In addition to being the worst performing first half since 2003, the second quarter of 2008 with 17 IPOs aggregating $5.4 billion was also the weakest quarter since the second quarter of 2003 when five listings raised $1.6 billion. Although, IPO activity in the first quarter is typically slower, activity usually picks up in the second quarter. The level of activity in the second quarter of 2008 was the lowest we have seen in four years.
"The turbulence in the credit markets and the related volatility in the equity markets continue to challenge IPO pricing," said Scott Gehsmann, a capital markets partner in PricewaterhouseCoopers' Transaction Services Group. "These challenges also appear to be deterring non-US issuers. Non-US issuers completed six IPOs that raised $1.0 billion in the second quarter of 2008, a 57 percent decrease in volume and a 75 percent decline in proceeds raised from the same period in 2007," Gehsmann added.
The uncertainty in the US market had led many companies to withdraw or postpone their going public plans. According to Renaissance Capital's IPOHome.com, 49 IPOs planned in the first six months of 2008 were either withdrawn or postponed, compared to a mere 13 scheduled IPOs during the same period in 2007. Of the 49 withdrawn or postponed IPOs, 23 of them occurred in the second quarter. "Companies are delaying, hoping the challenges will reside in the second half of the year," said Gehsmann.
While there were 43 financial sponsored-backed IPOs aggregating $8.8 billion in the second quarter of 2007, there were only four such IPOs raising $1.1 billion for the same period in 2008. Additionally, the level of special purpose acquisition company (SPAC) IPOs declined in 2008. There was only one SPAC IPO in the second quarter and eight in the first quarter of 2008 compared with 14 and 13, respectively, in 2007.
In the second quarter of 2008, the most active industry in terms of proceeds was energy, including renewable, with five IPOs that raised $3.2 billion followed by financial services with five listings that generated $1.1 billion. Interestingly, there were no IPOs in healthcare which, historically, had been among the most active industries.
"While we have seen a steady stream of companies entering the IPO planning phase, few have a clear view regarding deal timing," said Gehsmann. Given the number postponed or withdrawn IPOs in the first half of 2008 and the continued volatility in the US market, it remains to be seen how IPO activity will play out for the rest of the year.
US IPO Watch is a quarterly survey of all IPOs listed on US exchanges. These include IPOs by domestic and foreign companies, best-efforts, business development companies, filings with the FDIC, and bank demutualizations. IPOs do not include unit investment trusts and fully classified closed-end funds. This survey captures IPOs listed between April 1, 2008 and June 30, 2008. Visit our website,
www.pwc.com/ustransactionservices, for our 2004, 2005, 2006, 2007 and 2008 US IPO Watch reports.
The
Transaction Services group of PricewaterhouseCoopers offers a deal process that helps clients bid smarter, close faster and realize profits sooner on mergers, acquisitions, sales and financing transactions. For companies raising money on US or overseas capital markets, we offer a strategic perspective, practical solutions and a holistic service approach that helps management anticipate and resolve a broad array of transaction, financial reporting, and registration process challenges. Our global network of over 6,000 transaction professionals and more than 500 capital markets specialists operate from 16 US cities and some 90 locations in North America, Latin America, Europe and Asia.
About PricewaterhouseCoopers
PricewaterhouseCoopers provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 146,000 people in 150 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.
© 2008 PricewaterhouseCoopers LLP. All rights reserved. "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate and independent legal entity.
# # #
Additional media contacts:
Jenna Focarino
Brainerd Communicators, Inc.
Tel: 212-986-6667
