Aided by robust equities market and strong investor exuberance/sentiment, global IPOs saw the most active first quarter in 3 years, points out an EY study.
EY in its “Private Equity, Public Exits Q1 2014 Digital Edition” points out that two-thirds of PE-backed IPOs closed at or above their offer price on March 31st.
PE-backed IPO pipeline doubled
The EY report highlights that though the year is young, the industry is on pace to exceed the record activity last seen in 2013 for PE-backed IPOs, clocking $58.5 billion across 187 deals. During the last three months, the PE-backed IPO pipeline has more than doubled.
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The EY report notes the industry should witness the most accommodative listing environment since the crisis, save exogenous macro shocks.
The report points out that thanks to the comeback of the Euro equity market, the EMEA region saw the largest year-on-year gains during the first quarter of 2014. That quarter saw PE firms raising $7.4 billion across 15 IPOs. The Americas market also experienced nearly twice the amount from Q1 2013 raising $8.0 billion in the first quarter.
However, thanks to regulatory moratorium imposed on mainland China IPOs, the Asia-Pacific market was muted in 2013. The region clocked only six deals, though the total value increased over 200% as compared to Q1 2013.
The following graph highlights dramatic increase posted by PE-backed IPOs across all regions:
Strong IPO performance
The EY report points out that PE-backed deals that listed during the quarter posted strong performance. Two-thirds of PE-backed IPOs closed at or above their offer price on March 31st. Moreover, when viewed on a weighted average basis, deals increased 5.9% on their first day of trading and rose 7.0% through the end of the quarter.
The following graph captures the 2014 PE-backed IPO performance.
Filing for IPOs explode
The report points out that during the first quarter of 2014, 89 PE-backed firms filed for new IPOs, taking the number of companies in the pipeline to over 100. When considered in value terms, the first-quarter activity nearly doubled the pipeline to over $27 billion.
Citing Pitchbook, the EY report notes PE firms now hold over 12,000 companies globally; the number has grown as more companies view the IPO route could as the best path to more liquidity.
Interestingly, with its April 22nd pricing, Ares Management became the first PE firm in nearly two years to go public. The EY report highlights that Ares’ listing could enthuse others to follow.
The following graph captures the major PE firm’s going public: