U.S. IPO proceeds slowed to 2012 levels with 41 IPOs raising $6.2 billion, according to IPO Watch, a quarterly survey by PwC US. That is slightly over half the $11 billion raised in the same quarter last year, and down 63 percent compared to $16. 6 billion raised in the fourth quarter 2014.
However, there were 253 follow-on offerings in the first quarter raising a total of $68.8 billion, which is an increase of 103 percent in volume and 92 percent in value from the previous quarter.
Follow-ons are issuance of stock subsequent to the company's IPO, often used to pay off debt and increase the stock’s float or to move privately held shares into the public market. Over 23 percent of the follow-ons in the first quarter were backed by financial sponsors looking to systematically exit portfolio investments, according to PwC.
“While we saw a decline from the vigorous pace of activity in 2014, 41 IPOs in the first quarter is generally in line with historical first quarter IPO volume since 2010,” said Henri Leveque, partner, U.S. Capital Markets and Accounting Advisory Services leader, PwC’s Deals Practice. “As long as the broader stock market remains stable in the face of mounting domestic and global uncertainty, it is likely we will continue to see a robust atmosphere for IPOs and follow-on offerings.”
The 41 IPOs completed in the first quarter of 2015 represent a 42 percent decrease from the 71 issuances recorded in the robust first quarter of 2014. The healthcare industry led IPO market activity, according to PwC, accounting for 41 percent of total volume with 17 IPOs. The healthcare sector also led in follow-on offerings in terms of both volume and value for the first quarter of 2015.
“The interest in high-growth companies among investors remains prevalent as demonstrated by the demand for biotech IPOs in the current low-yield environment,” said Neil Dhar, partner, U.S. Capital Markets leader, PwC’s Deals Practice. “In the face of increased market volatility, it is important to explore and consider various market opportunities.”