Quarterly Update: IPOs Bounce Back

Back in April, in the aftermath of a disappointingly slow first quarter in the new issuance market, we searched the globe for a few bright spots. Today, with the second quarter having wrapped up in somewhat rousing fashion, we’re focusing on the IPO scene in the United States. There was a lot of good news.

June ended up being one of the three busiest months for IPOs since 2001, with 30 debuts totaling $6.6B. That’s almost half of the second quarter’s 62 total new issuances, and almost half of the total proceeds as well ($13.89B). Thanks to June, Q2 straight up doubled Q1’s output, which saw only 31 IPOs. A handful of sectors were responsible for this surge, including healthcare (as usual), REITs, and energy.

But no sector has seen a return as profitable as the Restaurants and Eateries space. The first half of 2015 has already seen four debuts from the “Fast Casual” space (which we’ve previously discussed), well above the 2.5/year average over the last decade with six months left to go. Of particular note is the record first-day performance and upsized offer prices these issuers have garnered, as all but one issuer significantly increased its initial file range by at least $3.00 per share.

Moving beyond the buffet, the three top IPOs in terms of proceeds for Q2 were Tallgrass Energy GP, LP ($1.4B), Univar Inc. ($885.5M) and Fitbit, Inc ($841.2M). Healthcare again dominated the deal count, accounting for 40.3% of the quarter’s 62 debuts, but only generating 20.1% of proceeds for IPOs with $2.6B. Also of note, Energy led the month in total proceeds raised (after also leading April), generating $3.0B from six issuers.

Despite the late boost from a variety of sectors, Q2 2015 still marked a substantial decrease in debuts from the prior year’s 76 IPOs which generated $22.9B in proceeds, but not every year can break records. The hope is that Q3 picks up the baton and keeps running with it, but without an Alibaba ($21.4B) looming, it’s unlikely that 2015 could ever match 2014. As for what is in the pipeline?

Unfortunately, without the biggest IPO of all time, the six-month pipeline shows an 80% drop in proceeds from this time last year, which saw $37.3B from 79 issuers, compared to $7.2B from 59 in 2015. some
notable names expecting to go public include TerraForm Global, Inc .($800.0M) and Blue Buffalo Pet Products ($500.0M).

It has yet to be seen which sectors will jump out in Q3, but if it hopes to keep pace with the last three months, let alone last year, it will likely need to be a few of them.