The IPO market is on track for its worst year since 2009

Steven Loeb · November 10, 2016 · Short URL:

The number of IPOs is down 49 percent, while the amount raised has fallen 48 percent Y2Y

There have recently been a few signs of a turnaround for the moribund IPO market, including a series of succesful offerings and companies looking to go public next year.

However, none of that will be enough to save this year, which is on pace to have the lowest number of IPOs since 2009, according to the 2016 U.S. IPO Trends Report out from PitchBook, when only 36 IPOs raised $9 billion. 

Through the first three quarters of 2016, there was just $7.24 billion raised across 49 public offerings. That includes both private equity and venture backed offerings, and it represents a decline of 49 percent and 48 percent, respectively, year-to-year.

Looking only at private equity-backed IPOs, there have been 18 so far this year, raising $5 billion, putting them on track for the slowest year since 2008, when there was $4 billion raised in 18 IPOs. 

Just three companies, US Foods, Patheon and Red Rock Resorts, have, so far, accounted for nearly half of total capital raised so far this year .

Activity has fallen precipitously since 2014. In 2015, when the amount raised dropped 56 percent and deals dropped over 47 percent year-to-year. 

When it comes to venture-backed IPOs, the decline is set to potentially be even worse. Through the first three quarters of this year, there was just $2 billion was raised across 31 VC-backed IPOs.

For the first time since 2008, not a single IPO in 2016 saw more than $250 million raised, and only four offerings raised more than $100 million. 

Overall, IPO activity is on pace to see a 64 percent decline from venture-backed listings in 2014.

If there is an encouraging sign for the market, it's that the number of IPOs increased every quarter this year, starting with just in Q1, then 11 in Q2 and 14 in Q3. That's still the lowest number of IPOs since the first quarter of 2013, when there were only 10, but it's still progress. 

The reason for the downturn in the IPO market, PitchBook said, is because of the significant amount of capital available to private companies that would otherwise be looking to go public.

"With an abundance of capital available from both PE and venture investors, the incentives to move forward with a costly public listing simply aren't there, especially when you couple the rich dry powder environment with an uncertain global economic, business, political and exit landscape," the company wrote.

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