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IPO Pricings Plummet Since Mid-May

Joe Mont | June 28, 2012

After a promising pace for the first five months of 2012, the number of IPO pricings significantly slowed in mid-May, according to new research by PwC US.  Data on registrations, however, is harder to gauge due to the confidentiality allowed to emerging growth companies under the JOBS Act.

Overall, the number of U.S. IPOs in the second quarter of 2012 declined to 27, from 44 in the first quarter.  That happened even as the quarter seemed to be off to a good start, with 17 IPOs pricing in April, and 10 in May. No pricings have been completed in the U.S. since the Facebook IPO in mid-May.

IPO Watch, a quarterly and annual survey of IPOs listed on U.S. stock exchanges by PwC, blames the pullback on diminished investor confidence and market volatility caused by unresolved domestic, European and Chinese macroeconomic concerns.  The analysts added that, despite a slowdown, “the registration pipeline remains at high levels and there is optimism that pricing activity will return as some of these concerns are resolved.”

Year-to-date, 71 companies have completed IPOs raising total proceeds of $26.9 billion, compared with 85 companies that completed IPOs in the first half of 2011 raising $25.8 billion. 

The slowdown in pricings in June led to a 39 percent decrease in volume compared with the first quarter of 2012, and a 48 percent decrease compared to volume in the second quarter of 2011.  Including the $16 billion in proceeds from the Facebook IPO, total IPO proceeds raised in the second quarter of 2012 amounted to $21.2 billion, 66 percent higher than the comparable period in 2011 and the third highest quarterly proceeds since 2007.

 “The solid registration pipeline remains a positive forward-looking indicator for the IPO market in 2012 and beyond,” says Henri Leveque, leader of PwC's U.S. Capital Markets and Accounting Advisory Services.

He adds that actual registrations may be higher than reported due to the new JOBS Act. It allows so-called emerging growth companies to file confidentially with the SEC with the requirement that they publicly disclose their filings within 21 days of their anticipated IPO road shows.