Part 8 of a series of posts on the JOBS Act
The year just ended saw the largest number of IPOs in history, but the exact number remains a matter of some contention.
According to IPO information provider Renaissance Capital, there were 273 U.S. IPOs filed in 2014, raising a total of $85 billion.
But according to Dealogic, there were 293 U.S. IPOs in 2014 raising a total of $95.9 billion.
Whatever the case, there’s no doubt that 2014 was an historic year for IPO filings, with health-related IPOs leading the way.
According to a comprehensive report released in August 2014 by Ernst & Young called “The JOBS Act: 2014 Mid-Year Update,” the year had all the earmarks of a banner performance for IPOs.
“For the first time in more than 10 years, the second quarter of 2014 marked the third consecutive quarter that had more than 70 IPOs on U.S. exchanges,” the report said.
Emerging Growth Companies, or EGCs, dominated the IPO market, according to the report, representing 84 percent of all IPOs that became effective.”
EGCs are defined as companies with total gross revenues of less than $1 billion in their most recently completed fiscal year.
With more than 150 IPOs filed through the first half of 2014, it looked like the year could see a total of 300 IPOs by year’s end.
With recent number releases by Renaissance Capital and especially Dealogic (293), that August projection came close to becoming reality.
The E&Y report clearly showed the trend in the number of effective IPOs filed by year from 2004 through the first half of 2014:
- 2004: 238 filings
- 2005: 208 filings
- 2006: 204 filings
- 2007: 214 filings
- 2008: 35 filings
- 2009: 65 filings
- 2010: 162 filings
- 2011: 124 filings
- 2012: 133 filings
- 2013: 226 filings
- 2014 (through June): 158 filings
The above figures starkly reveal that the number of IPOs was holding relatively steady at just over 200 annually from 2004 through 2007 and then dropped precipitously in 2008 and 2009, the hardest-hit years of the recent U.S. recession.
The number of effective IPOs began rising again in 2010 through 2012 and jumped dramatically in 2013 – the first full year after the April 2012 JOBS Act passage—to 226.
The E&Y report said the IPO market began surging in the second quarter of 2013 and has maintained a strong pace ever since.
That jump in IPO activity in the first half of 2014 raised some amazing capital, with the 158 IPOs of the period raising $35.2 billion—a 66% jump over the first half of 2013.
“The uptick in activity has been spurred by an increase in the number of IPOs backed by financial sponsors such as private equity and venture capital firms,” the report notes.
Although not releasing specific figures, the E&Y report noted that the industry breakdown of EGCs filing IPO registration statements since April 2012 was:
- Healthcare: 32%
- Technology: 20%
- Real Estate: 9%
- Oil and Gas: 9%
- Financial Services: 9%
The E&Y report also showed that companies filing IPOs in 2014 had less revenue on average than in the previous year.
More than half of the IPO companies filing in the first half of 2014 had revenues below $55 million compared to an average of $80 million for companies filing in 2013, the E&Y report said