Can IPO Issuance Exceed 200 Deals For 2015? A Streak Last Seen In 1998-2000

Can IPO Issuance Exceed 200 Deals For 2015? A Streak Last Seen In 1998-2000

Can IPO Issuance Exceed 200 Deals for 2015? by Renaissance Capital

Year-to-date, 131 IPOs have raised $22 billion, 31% fewer offerings than last year but exactly in line with 2013, which ultimately saw 222 deals. Matching that level of activity now appears unrealistic due to the recent selloff in equities, a still-weak energy sector, uncertainty over US interest rates, trouble in emerging markets and high volatility heading into September. The VIX volatility index has reached levels not seen since September 2011, a month where no IPOs priced. However, 2011 had moderate IPO issuance in the fourth quarter even as the VIX ranged from 20 to 40. For the IPOs that come, returns should improve as investors demand greater valuation discounts. An uptick in August filings suggests that we could see 60-70+ IPOs through the rest of the year, but elevated volatility could drag the range down to about 30-40. Biotechs continue to represent a large share of IPOs; 60% of new IPO filings in August were from health care companies. The end of the year could also see as many as eight IPOs raise at least $1 billion, led by mega LBOs including First Data, Neiman Marcus and Univision, some of the last major holdovers from the 2005-2007 buyout binge. Soul Cycle and Pure Storage are among the few highgrowth tech and consumer IPOs on file; these sectors remain wildcards in determining whether the IPO market reaches 200 offerings for the third year in a row, a streak last seen in 1998-2000.

Play Quizzes 4

As of September 8, there are 122 companies publicly on file for US IPOs looking to raise a combined $32 billion. The active pipeline – companies that have submitted new or amended filings since July 1 – includes 68 companies seeking an estimated $23 billion. However, we note that 61% of IPOs in the fourth quarter last year had not been on file before Labor Day, suggesting that a meaningful portion of potential 4Q15 deal flow is sitting outside the active pipeline.

Key Takeaways:

Fund Manager Profile: Zhang Hui Of China’s Southern Asset Management

investHistorically, the Chinese market has been relatively isolated from international investors, but much is changing there now, making China virtually impossible for the diversified investor to ignore. Earlier this year, CNBC pointed to signs that Chinese regulators may start easing up on their scrutiny of companies after months of clamping down on tech firms. That Read More

  • Five Mega LBOs Could Each Raise Over $1 Billion
  • Few Growth IPOs Have Submitted Public Filings; Technology on Pace for Lowest Level Since 2009
  • Health Care Sector Will Continue to Drive IPO Activity Through Year-End
  • Shadow IPO Backlog Should Contribute Meaningfully to 4Q15 Issuance
  • 2015 IPO Issuance Could Still Exceed 200 for the Third Straight Year

Five Mega LBOs Could Each Raise Over $1 Billion

Private equity-backed IPOs represent 49% of the active pipeline, compared to 36% at this point last year. The group includes 21 leveraged buyouts and 12 companies backed by growth equity. Ten LBOs have gone public in 2015 but none have raised over $800 million. A surge of LBOs filed in July and August as PE firms attempt to exit their positions and pay down debt ahead of the start of an interest rate hike cycle. Just one LBO last year raised over $1 billion, but five have geared up for potential billion-dollar IPOs in the final four months of 2015. First Data, which could be the year’s largest IPO, Univison and Albertsons (Safeway) are among the last remaining LBOs from the 2005-2007 buyout boom. Neiman Marcus and Performance Food are also known names seeking to return to the public markets. With 2015 M&A activity on pace to exceed 2007, some PE-backed companies may opt for a sale instead of an IPO, motivated by the certainty of liquidity. Large LBO SunGard went this route in August, and Petco is reportedly in a dual track process.

IPO Issuance

First Data: A provider of electronic commerce and payment processing for financial institutions, First Data was LBO’d in 2007 for $29 billion by a consortium of PE firms led by KKR, marking KKR’s largest single investment ever. With a deal size estimated around $5 billion, First Data could be the largest IPO of 2015 and only the fifth IPO in the last decade to raise more than $5 billion.

Neiman Marcus: LBO’d in 2005 for $5.1 billion, Neiman Marcus is a luxury department store retailer that operates 43 full-line stores in the US. After attempting an IPO in June 2013, it withdrew the following September when it was sold to Ares Management and the CPPIB for $6 billion. The highly-levered company has had positive comparable store sales growth for 23 consecutive quarters.

Albertsons Companies: Cerberus Capital-backed Albertsons is the second-largest US grocer behind Kroger. The company operates 2,281 stores across 33 states under 18 brands. Albertsons, which generated $58 billion in sales during the last twelve months, was carved out of SUPERVALU in 2013 for $3.3 billion before it acquired Safeway the next year for $9.2 billion.

Univision: Leading Hispanic-American media provider Univision originally went public in 1996, and in 2007 the company was acquired in a highly leveraged buyout for $13.7 billion by a private equity consortium led by TPG. Univision Network is the most-watched US Spanish-language broadcast television network. The company reaches over 49 million media consumers on a monthly basis.

Petco Holdings: Following an IPO in 2001 and an LBO by TPG Capital and Leonard Green Partners for $1.8 billion in 2006, Petco is reportedly on a dual track process that could value the company at $4-$5 billion. It operates more than 1,400 pet superstores in the US, Mexico and Puerto Rico. In March, close competitor PetSmart was acquired for $8.7 billion by a PE consortium led by BC Partners.

Few Growth IPOs Have Submitted Public Filings

Ferrari’s initial public offering could raise $1 billion in one of the year’s most highly-recognized deals. Caribbean wireless provider Digicel and Freeport-McMoRan’s deepwater Gulf of Mexico E&P are also large enough to raise $1 billion. The technology sector accounts for just 11% of IPOs year-to-date, the lowest since 2008. The 15 tech IPOs have declined more than any other sector after their first day, and the group averages a total return of -4%, which combined with ample funding and generous valuations in the private markets may be causing many to sit on the sidelines. There are only six tech companies in the active IPO backlog, putting the year on track to see about 50% fewer tech IPOs than 2013 and 2014. The Pure Storage IPO will test investors’ appetite for breakneck growth (200%) paired with extremely steep losses ($199 million LTM operating loss). The consumer sector has an average return of 17% but is plagued by poor aftermarket trading and a recent flop from Amplify Snack Brands, which boasted high growth and strong cash flow. The eight consumer IPOs in the active backlog are skewed to larger, more mature companies; only SoulCycle and At Home Group have meaningful growth. The energy and financial sectors have eight and nine active filers, respectively, about half of which are dividend-producing MLPs and REITs. Weak energy prices and poor performance for oil, gas and solar IPOs will likely keep energy activity depressed outside of select situations. There have been more REITs in 2015 than last year and regional banks continue to price IPOs; both trends appear likely to continue through year-end.

IPO Issuance

See full PDF below.

About Renaissance Capital

Renaissance Capital is a global IPO investment advisor providing institutional research, investment management and indexing services. The Firm’s IPO Intelligence research services provide pre-IPO fundamental analysis and global IPO market analytics to the top institutional buyers of IPOs. Renaissance Capital manages portfolios of unseasoned equities through the Global IPO Fund (symbol: IPOSX), the Renaissance IPO ETF (symbol: IPO), the Renaissance International IPO ETF (symbol: IPOS) and separately managed institutional accounts. The Firm maintains the FTSE Renaissance Global IPO Index Series (symbols: IPOUSA, IPOXUS), which serve as benchmarks of IPO performance and are used as the basis for investment products. For more information, visit

Updated on

Sheeraz is our COO (Chief - Operations), his primary duty is curating and editing of ValueWalk. He is main reason behind the rapid growth of the business. Sheeraz previously ran a taxation firm. He is an expert in technology, he has over 5.5 years of design, development and roll-out experience for SEO and SEM. - Email: sraza(at)
Previous article Oak Associates: Mark Oelschlager On Heavy Trading Volumes Of ETFs
Next article Alibaba Stock Slumps After Warnings About Lower Spending

No posts to display