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BDO Survey Says 2012 IPO Market Losing Luster

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June 25, 2012

According to a new study by BDO USA, few capital markets executives agree about trends in US IPOs for the remainder of 2012. The bankers are relatively evenly divided among those that predict an increase (33%) in the number of IPOs and those that are forecasting flat (36%) or negative growth (31%), said the report.

 

Bankers anticipate these offerings will average USD 221 million in size, which projects to more than USD43 billion in total IPO proceeds on US exchanges in 2012. The BDO IPO Outlook Survey is a national telephone survey interviewing 100 capital market executives.

Key Findings

  • IPO activity on U.S. exchanges increased steadily during the first quarter of the year and carried solid momentum until April

 

  • Global political and financial instability (59%) was the most often cited threat in the second half of the year.

 

  • The presidential election (20%), the threat of government spending cuts (9%), constrained bank lending (6%) and continued high unemployment (6%) were the other threats mentioned.

 

  • Except for the Facebook offering, the size of the average IPO in 2012 is running considerably smaller than 2011

 

  • US exchanges are playing a larger role in the global IPO marketplace in terms of total proceeds: 43% percent of the investment banking community sees US exchanges continuing to increase their percentage of global IPO proceeds during the remainder of the year. More than a third (36%) believe it will remain steady and aonly one-fifth (21%) see the U.S. share declining in the second half of 2012.

 

  • The technology sector is the most popular industry sector for IPOs. Almost three-quarters (73%) of investment bankers predict even more tech offerings during the second half of the year. A majority see the numbers of IPOs from the energy (61%), healthcare (55%) and biotech (54%) verticals increasing as well. No other industries came close to receiving a majority of support for the likelihood of growth in IPOs during the remainder of the year, the survey found.

 

Things are not looking a lot better in China at the moment, particularly consumer-goods companies, which have been falling out of fashion with venture firms, as a result of disappointing public offerings and fears of an economic hard landing scare investors, says WSJ Venture Dispatch blog .

 

Venture-backed deals in the consumer sector totaled USD 200.2 million from January to June, a steep drop from USD 468 million recorded in the same period a year earlier. (Image source: BDO IPO Outlook 1Q2012)

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