The volatile trading that defined last year led to a very choppy market for companies wanting to go public.
The number of US companies that successfully made an initial public offering (IPO) of stock last year dropped by more than 40 percent compared with 2014, according to a report by IPO research firm Renaissance Capital LLC.
The amount raised was considerably less as well, falling from US$85.3 billion to US$30 billion last year. The drop-off was the result of significantly reduced ambitions from companies as they hit the market, as well as wariness by investors rattled by sharp swings on Wall Street, particularly in the second half of the year.
The August downturn and a US market correction in September convinced a lot of companies to put their plans to go public on hold, Renaissance Capital said.
‘TAILSPIN’
“For the first eight months of the year, the IPO market was on target to reach over 200 IPOs with solid returns, but went into a tailspin in August and September that wiped out positive performance, drove abnormally high IPO discounts and brought issuance to a near halt by year-end,” the firm said in its report.
IPO activity stalled not only in the US, but around the world. The amount of money raised in initial stock offerings globally was US$156.2 billion, down by 35 percent from a year earlier.
Asia was still a significant driver, even with the problems in the Chinese stock market. However, that was due largely to the initial public offering of Japan Post Holdings Co Ltd, which took its bank, insurance and holding companies public in three separate transactions in October. That combination IPO raised US$12 billion.
The industry that had the largest number of IPOs was healthcare, followed by energy. Technology IPO activity dropped considerably last year, with only 23 companies raising US$4.2 billion, compared with 55 companies raising US$32.3 billion in 2014.
DWARFED BY PRECEDENT
Even mega-IPOs that tend to generate investor and media interest evaporated last year.
The largest IPO of last year was First Data Corp, which raised US$2.56 billion, but even that was a struggle and it had to be dialed back.
It was an especially paltry showing when you consider that the previous year, Chinese online shopping portal Alibaba Group Holding Ltd (阿里巴巴集團) held an IPO and raised an eye-popping US$22.03 billion. Alibaba shares were down 22 percent last year.
In a separate report, investment banking research firm Dealogic PLC showed that the investment bank that helped raise the most money and take the most companies public was JPMorgan Chase & Co, followed by Goldman Sachs Group Inc and Morgan Stanley Inc.
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