While September might have been a good month for IPOs, things have slowed down considerably again, and don’t expect that to change before the first quarter of 2017. The last six weeks of the year are typically slow. There’s also the black swan outcome of the U.S. presidential election to factor into the picture.
What that means: 2016 will likely see as few IPOs as 2009 — there’s just too much ground to make up at this point.
New Pitchbook numbers underscore the point. In the first three quarters of this year, just $7.24 billion was raised across 49 public offerings — declines of 49 percent and 48 percent, respectively, over the first three quarters of 2015. And that’s taking both PE-backed and VC-backed companies into account. Breaking things down further, just $2 billion was raised across 31 venture-backed IPOs.
Also, for the first time since 2008, not a single IPO raised more than $250 million for the issuer, notes Pitchbook. That largely owes to smaller floats. As IPO pro Lise Buyer noted when we chatted with her last month, it “used to be that you sold 10 to 20 percent of your shares in an IPO, but . . . valuations are low, so companies are smart to take advantage of the [demand created from] limited supply.”
So what happens next? It’s hard to know. Most companies take advantage of the ability to file confidentially, which allows them to get the process started without alerting their competitors to their numbers. We may see a healthy number of offerings in the first quarter; we might not.
Of course, even those that may have been prepping public offerings could push them off for now while the markets adjust to the new U.S. president. As you might have noticed, while most of the market rose yesterday, tech stocks have been crumbling over apparent concerns about the impact the incoming administration will have on trade overseas.
You can find Pitchbook’s newest numbers here, if you’d like to read more.