Initial public offerings could be on the rise in 2017, after the quietest year since 2009. Bouts of volatility stemming from concerns about the Chinese growth and global credit markets, and the uncertainty – and shocks – of the Brexit vote and the US presidential election meant the American market saw only 28 private equity-backed and 38 venture capital-backed IPOs by 9 December, according to PitchBook.
“The IPO market was dormant because of the volatility,” says Greg Stento, a managing director with HarbourVest in Boston. “We had Brexit that scared everyone. We had the whole election cycle. It hasn't been a great year for IPOs because of all the uncertainty.”
Post-crisis 2009 saw only 26 private equity-backed companies and 10 venture capital-backed companies going public in the US, according to PitchBook, while 2015 had a relatively healthy 41 private equity and 76 venture capital floats.
“What's driving the slowdown is that the outcome of some IPOs has been mixed,” adds Ethan Vogelhut, an executive director at Adveq who leads the firm's US buyout and turnaround investment activities.
After the election of Donald Trump, there was a flurry of offerings. For instance, at the beginning of December, annuity provider Athene Holding, an Apollo Global Management portfolio company, raised $1.1 billion. But it's unclear whether this was the market beginning to pick up pace or investors taking advantage of a small window of stability.
“We need another quarter or two to see what happens,” said Nizar Tarhuni, senior analyst at PitchBook. “It's too early to tell whether it will continue.”
On the VC front, a slew of start-ups, mainly 'unicorns' valued at $1 billion or more, are waiting to go public.
Social media company Snap, previously Snapchat, could trigger a rush of venture capital-backed start-ups going to market. The company confidentially filed for an IPO in November, according to the Wall Street Journal .
“Next year could be the year of the great tech IPO,” said Steven Yang, an executive director at Adveq and the head of the firm's technology programme. “Snap is really going to set the tone.”
And if Trump relaxes the regulatory environment for publicly traded companies, making it more appealing to go public, IPOs could boom.
“There's a chance the IPO market could reopen in much bigger ways,” says Tony Tutrone, global head of alternatives at Neuberger Berman. “If there's a relaxation in reporting, it may be more attractive. There's a huge supply ready to go. There's certainly a backlog.”