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Robust 2012 tech IPO scene is likely

Roy Harris | Dec. 21, 2011
A volatile Q3 market for initial public offerings gave way to a fertile fourth period --- especially for technology-based companies early --- and that is raising hopes for a continuation of the tech IPO boom in 2012.

Of the 38 companies entering the IPO registration process in Q4, energy businesses accounted for eight, followed by consumer companies with seven and healthcare and financial services companies with six each. (There were also eight companies withdrawing IPOs in the quarter, after filing to go public earlier in 2011.) The year-to-date pipeline now includes 164 companies, with the industrial, technology, energy and financial services accounting for 68% of the volume.

Heavy Private Equity and VC Participation

Eighteen of the 28 IPOs in the fourth quarter 2011 to-date were backed by either private equity or venture capital sponsors, accounting for $4.9 billion of total quarterly proceeds.

According to PwC, financial sponsored IPOs contributed 77% of total proceeds in the fourth quarter. Financial sponsor-backed companies also represent 54% of the current year-to-date IPO pipeline, showing continued interest from private equity to use the equity markets as an avenue to exit.

In Q4, the steep fall-off in volume of foreign issuers coming into the U.S. IPO market continued, with only four, compared to 28 a year earlier. The main contributor for non-U.S. proceeds in the current quarter was Hong Kong-based Michael Kors, which raised $944 million.

 

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