IPO activity slows in second quarter
NEW YORK (MarketWatch) -- Initial public offerings activity in the U.S. slowed in the second quarter mainly due to global economic challenges that hit investor confidence hard and the JOBS Act, according to two accounting firms that track IPO data.
PricewaterhouseCoopers on Wednesday said the number of IPOs filed in the second quarter slipped to 27, compared to 44 in the first quarter.
Excluding the $16 billion
"The IPO market entered the second quarter with considerable momentum and with confidence levels supported by the high registration pipeline," said Henri Leveque, head of PwC's U.S. capital markets and accounting advisory services. "However, pricing activity proved unsustainable as volatility increased along with renewed concerns over global uncertainty."
PwC also said that actual registrations may be higher than reported because of the Jumpstart Our Business Startups Act, or JOBS Act, which was passed in April and allows new businesses to file confidentially with the Securities and Exchange Commission. Business owners do not have to publicly disclose that they are going public until 21 days before they begin their IPO roadshow. Read more on JOBS Act.
"The ability to file confidentially as a result of the JOBS Act now makes it challenging to gather a complete picture of the IPO pipeline or have a sense for when the companies that filed confidentially will choose to test the market," said Herb Engert, strategic growth markets practice leader for Ernst & Young, in a statement. "We're working with a 'new normal' regarding the transparency of the pipeline."
Ernst & Young's U.S. IPO Pipeline Analysis report, also released Wednesday, said IPOs issued in the second quarter rose an average of 8.8% as of June 22, compared with a 23.2% average in the first quarter.
For the second quarter, the firm recorded 26 IPO issuances and 18 withdrawals, compared to 44 issuances and 10 withdrawals from the previous quarter.
Despite macroeconomic headwinds, the IPO pipeline remains robust, both firms said.
According to Ernst & Young, of the 132 IPO applications currently in the pipeline, 28 are in technology, 20 are in oil & gas, and 11 are in pharmaceuticals. Regionally, California leads in volume with 24 companies seeking $2.3 billion, followed by Texas with 12.
At least 17 of the companies registered to go public are from foreign countries, majority of which are from China. In Europe, IPO activity fell dramatically by 65% in the second quarter.
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