The August IPO Slowdown

We’ve entered Summer’s homestretch.

As September approaches, everyone is squeezing in their last few weeks of relaxation and vacation before school starts and everything gets back to normal. The new issuance market is no different. On the contrary, the last two weeks of August in the new issuance market are basically one long vacation for IPOs.

Last week, the slowdown seemed to be approaching, as only three IPOs priced for $373.1M. The largest deal of the week was from Houlihan Lokey, a Los Angeles investment bank known for advising on the bankruptcies of Enron and Lehman (to name a few), which raised $220.5M, about 25% less than its intended $300.4M. Meanwhile, Global Blood Therapeutics ($120.0M) added one more name to the Biotech scoreboard, pricing a healthy $2.00 above the top-end of its filing range. Also of note, Global Blood joined the prestigious ranks of the Top 10 First-Day IPO Pops of the past 12 months, soaring 115.6% upon hitting the markets. The final deal was a small offering from Michigan-based insurance holding company Conifer Holdings for $32.6M.

Three other potential debuts that were originally slated for last week got rescheduled. Boxlight ($20.0M) postponed its offering due to those pesky market conditions, while Poseidon Containers Holdings ($230.7M) decided to withdraw its intended offering, following its postponement two weeks ago, and Expro Oilfield Services ($100.0M) also withdrew for the same reasons.

This week, things stopped slowing down and simply stopped. There’s not a single IPO on the docket for this week, and not much for next either. The one IPO that was expected – GC Aesthetics – got postponed. So it’s a ghost town.

The good news is that this nothing to be alarmed by, in fact, it’s basically tradition. Just take a look at the graphs below, for 2014, 2013 and 2012:

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That U shape is not an anomaly. There has long been a dip between July and September, and this year’s is nothing but business as usual. The question is how September and the rest of the year responds, after everyone gets back to work.

As of right now, it doesn’t look too bad. The current 6-month backlog currently stands at 52 filings for a combined $6.2B, down from the year-ago pipeline which contained 73 upcoming deals for $16.0B (not including Alibaba’s $21.4B not-yet-priced intended offering).

So don’t sweat the August swoon. But if things don’t start to heat up once the weather starts to cool down? That’s a different story.