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IPO pipeline primed for strong Q4 and 2012

by Mary Kathleen Flynn | Published September 28, 2011 at 4:13 PM

It's of little surprise that during the volatile third quarter, six companies withdrew initial public offerings. More surprising, however, is the fact that a whopping 74 companies filed their intent to go public during the period, according to a report issued Wednesday by PricewaterhouseCoopers LLP.

PwC's IPO Watch, a quarterly and annual anlaysis of IPOs on U.S. stock exchanges, said the third quarter filings marked a slight increase from the year-earlier quarter and offer an encouraging sign that an IPO is still viewed as "a long-term viable option for accessing the capital markets," said Henri Leveque, leader of PwC's U.S. capital markets and accounting advisory practice.

Technology companies dominated the new entrants, with 21 filings, followed by financial services and industrials with 12 filings each and 11 for energy companies.

One third of the companies that filed in the quarter did so in August, at the peak of market volatility, an indication that "the pipeline remains primed for a strong showing in the fourth quarter of 2011 and into early 2012," Leveque said.

Kathleen Smith, co-founder of IPO research firm Renaissance Capital Corp., also said she was encouraged by the volume of companies in the IPO pipeline.
"It tells you there's a lot of interest in the IPO market by issuers, and even though the valuations are going to be challenging for the issuers, there's still interest in what it means to be a public company, both the capital raised and the liquidity it provides," Smith said.

Further evidence of pent-up optimism can be found at NYSE Euronext.

"Our backlog is the highest it's been in a decade," said Scott Cutler, the exchange's executive vice president and head of listings, Americas. "This is reflective of more companies being in a position to come to the market. There's also a large number of international issuers, so the U.S. as a choice of listing venue is higher than it's been in years past."

For all this enthusiasm to translate into transactions, a couple of things must happen: a resolution to the financial issues facing Europe and a calming of market volatility, Cutler said. But once those conditions are met, the floodgates may open, he argued.

"My expectation is that as the overall market settles, we'll see a rush of activity, just as we saw a crazy amount of transaction volume in the last three months of last year," Cutler said.

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Tags: initial public offering | IPO | NYSE | PricewaterhouseCoopers LLP | Renaissance Capital Corp.

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IPO pipeline primed for strong Q4 and 2012

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