Taking a global view, you'd likely form the conclusion that the IPO market is in good health. After all, the value of worldwide IPOs in the first nine months of 2006 increased to $140.6 billion (€111.9 billion) from $100.4 billion during the same period last year, according to data provider Dealogic.
But focus on the US alone, and here you'll find a discordant note being struck. In 2005, out of 24 IPOs globally that had a value of more than $1 billion, only one floated in New York. And things haven't improved much since. The third quarter of 2006, for example, saw 12 IPOs worth $3.5 billion, compared with 34 offerings worth $6.6 billion in the same period of the previous year.
Indeed, the US IPO market has slowed to such an extent that New York mayor Michael Bloomberg recently commissioned consulting firm McKinsey & Co. to find out why. The consulting gurus won't reveal their findings for a while yet, but there are many theories as to why firms looking to go public are unlikely to be in a New York state of mind.
Analysts cite a variety of reasons why London and other overseas markets are viewed by IPO candidates as more appealing. US investment bank underwriting fees are typically 6.5 percent to 7 percent, compared with the 3 percent to 4 percent norm in Europe and generally even lower fees in Asia. Another factor might be London's ability to transact deals in 60 milliseconds compared to 290 for the New York Stock Exchange (NYSE). In response to this, the NYSE earlier this year began gradually rolling out a new electronic trading system.
TABLE: 1 US IPOS: NUMBER OF DEALS BY QUARTER
THE TOP 10 US SPONSOR-BACKED IPOS IN THE FIRST NINE MONTHS OF 2006
|Warner Chilcott||1,059.0||NASDAQ||Bain Capital; DLJ Merchant Banking Partners;|
|JP Morgan Partners; Thomas H Lee Partners|
|Complete Production Services||717.6||NYSE||SCF Partners|
|EXCO Resources||697.0||NYSE||Oaktree Capital Management; Greenhill Capital|
|Partners; Cerberus Partners; Ares Management|
|Magellan Midstream Holdings||539.0||NYSE||Madison Dearborn Partners; Carlyle/Riverstone|
|Global Energy & Power|
|Vonage Holdings||531.3||NYSE||3i Group; Bain Capital|
|Sealy Corp||515.2||NYSE||Bain Capital; Kohlberg Kravis Roberts|
|Burger King Holdings||488.8||NYSE||Bain Capital; Goldman Sachs Capital Partners;|
|Texas Pacific Group|
|Goodman Global Holding||487.1||NYSE||Apollo Management; AlpInvest Partners|
|VeraSun Energy||482.7||NYSE||EOS Private Equity|
|J Crew Group Inc||432.4||NYSE||Texas Pacific Group|
IndustryBookrunnerHealthcareGoldman Sachs; Credit Suisse; JP Morgan; Morgan StanleyOil & GasCredit Suisse; UBSOil & GasJP Morgan; Bear Stearns; Goldman SachsOil & GasCitigroup; Lehman Brothers; Goldman Sachs; WachoviaTelecomCitigroup; Deutsche Bank; UBSConsumer ProductsCitigroup; Goldman Sachs; JP Morgan; Banc of AmericaDining & LodgingJP Morgan; Citigroup; Goldman Sachs; Morgan StanleyConstructionJP Morgan;, Merrill Lynch;, Goldman SachsUtility & EnergyMorgan Stanley; Lehman BrothersRetailGoldman Sachs; Bear Stearns