The global market for initial public offerings (IPOs) has jumped. In addition, interest in new equity issues are expected to remain healthy and are being driven by continued investor demand for growth and the equities markets. According to IPO Watch, a PwC US quarterly survey of IPOs, there were 89 public company debuts in the second quarter of 2014, representing $21.5 billion in proceeds raised. On an annual basis, this represents an increase of 41 percent over the 63 public listings in the second quarter of 2013, and a 63 percent increase over the $13.2 billion raised. For the first half of the year, there were a total of 160 IPOs, generating $32.4 billion in proceeds compared to 97 IPOs totaling $21 billion in the same period the previous year. "Domestic capital markets activity remained very healthy during the second quarter with deal flow rebounding following a brief pullback in the spring," said Henri Leveque, leader of PwC's U.S. Capital Markets and Accounting Advisory Services. "Investors continue to search for growth opportunities given record low interest rates both in the U.S. and Europe, and a low growth economic environment.
If the current strength of the equity markets continues and the global economic recovery stays on pace, the total number of 2014 IPOs and proceeds raised may surpass 2013 levels of 238 new issuers and $57 billion." Healthcare and technology companies continued their high activity levels of the first quarter to lead the way in volume, and technology, consumer and energy companies raised the most proceeds. Financial sponsors maintained their strong presence in the public markets, backing 76 percent of the second quarter IPO value, slightly outpacing the same time period last year when financial sponsors represented 70 percent of IPO value. The ongoing pattern of sponsors not necessarily selling down their positions in the IPO, but rather staggering their sell-down over subsequent follow-on equity offerings and subsequent transactions continued. In addition, the high yield debt market continued to be driven primarily by refinancings, and remained active, handily exceeding proceeds raised in the second quarter 2013.
"Companies are continuing to take advantage of low interest rates to refinance their existing debt and take on additional leverage with more flexible terms," said Neil Dhar, PwC's U.S. Capital Markets Leader. "Management teams remain focused on finding the best outcome for their funding and liquidity goals and are thinking through a number of critical factors as they navigate the capital markets. We're seeing a deeper focus from participants on deal structures, rates, valuations, and fee arrangements. With capital market windows opening and closing at faster rates than ever before, independent evaluations of debt and equity issuers can deliver more successful deals."