Buyout firms drive second quarter US IPO numbers(3)

Private equity-backed IPOs in the US accounted for more than half of the second quarter’s IPOs and generated more than 60 percent of total proceeds.  The Blackstone IPO, the largest offering, contributed 20 percent or $4.1 billion (€3 billion) to total value.

Second quarter IPO activity continued to build on the momentum from the first quarter, raising more than $21.0 billion via 71 IPOs, according to data released by accountants PricewaterhouseCoopers.  This is the highest second quarter in terms of volume and value since 2000, when 98 IPOs raised $33.3 billion.

“After a robust first and second quarter, first half results surpassed those of 2006, representing 56 percent and 65 percent of total 2006 volume and value,” said Scott Gehsmann, a capital markets partner in PwC’s Transaction Services group. “Financial sponsor-backed IPOs continued to increase their presence as they harvest their investments and raise capital using public vehicles,” Gehsmann added. 

The second quarter saw 43 financial sponsor-backed IPOs raising an aggregate of $12.7 billion or 60 percent of the quarter’s proceeds.  The second quarter amounts were up significantly from the 21 IPOs and $5.2 billion in the same period last year. 

Financial sponsors backed 13 healthcare ($1.5 billion) and 13 technology/ infocom ($3.9 billion) IPOs.

The five largest deals – each with proceeds north of $1 billion – dominated, accounting for 46 percent of total proceeds.  This is a a slight increase from 41 percent in the second quarter of 2006.  Two of the top five offerings were financial sponsor-backed, representing 25 percent of the second quarter’s proceeds.

The top 10 IPOs contributed 61 percent of total dollars raised, with proceeds almost doubling from the same period last year.  Driving the increase was the Blackstone IPO, which generated $4.1 billion or 32 percent of the total value raised by the top 10. 

The industry mix of the top 10 differed significantly from that of the prior year, where the dominant industries were consumer and energy.  Continuing the industry mix from the first quarter 2007, the most active industries in the second quarter were financial services with four IPOs and technology with three.  

Financial services led in total proceeds raised, accounting for 46 percent or $9.7 billion of the total – a huge leap from 19 percent in the previous year’s second quarter.  The Blackstone IPO contributed nearly half of this. 

Seven of the 16 IPOs were special purpose acquisition vehicles or “blank check” companies that together raised over $1.0 billion on the AMEX.
 
NYSE leads in value, raising $12.5 billion through 23 IPOs, while NASDAQ leads in volume, with 38 IPOs raising $5.8 billion. The AMEX listed 10 IPOs, raising $2.7 billion. 

Strong first and second quarter IPO activity bode well for the second half of the year. Gehsmann said the IPO pipeline continued to be strong despite the recent turbulence in the debt markets.