2016 in New Issuance

2016 saw a lot of change, much of which won’t have its true impact revealed for years. Great Britain left the European Union, the United States pinned its hopes to a reality TV star, the Chicago Cubs won the World Series. Ordinary, 2016 was not.

Within the world of initial public offerings, things weren’t exactly smooth sailing either. Just two years after a record output, 2016 continued a downward trend. A mere 88 IPOs saw their debuts over the past 12 months, almost 50% fewer than the 149 deals 2015 brought to market (we’re loath to even bring up the 263 IPOs that landed in 2014 – 102 from Healthcare alone!)

Proceeds wise, 2016 didn’t fare any better. Those meager 88 deals brought in $19.9B, down from 2015’s $32.8B. The silver lining is that the per-IPO average rose a bit, from $218.4M the previous year to $223.8M. So that’s something!  Of course, despite that small increase, 2016 welcomed only four mega-deals that generated over $1B in proceeds – again, a slight improvement on 2015’s three $1B+ IPOs but not exactly a bounty. (Not to bring up old stuff again, but 2014 saw 17 mega-deals, with Alibaba’s all-timer leading the pack.)

How did the sectors fare? Perennial front-runner Healthcare, whose aforementioned 102 IPOs in 2014 and 64 in 2015 kept it atop the standings, held tight to pole position with 33 deals generating $3.7B – accounting for 38% of all of 2016’s deals. The Technology sector had the second most deals with 18, but generated the fourth-most proceeds ($2.882B), behind Consumer Services $3.0B and Financials $2.885B, both off of nine debuts.

The year’s biggest deal sprung from the heretofore unmentioned Industrials sector. ZTO Express (Cayman) Inc. amassed $1.4B in October, which, sticking to the trend, came in at half the size of 2015’s largest deal (which coincidentally also landed in October). The fourth quarter of 2016 slowed to 25 IPOs, not exactly bouncing back from the summer session, which, despite the typical August swoon, still bested Q4 with 31 debuts.

Despite a few promising spurts, momentum never really sustained in 2016, and now we’re left wondering what the world’s changes will have in store for the New Year. What can we expect? It seems foolish to even speculate, but the pipeline may hold some clues…

The current 6-month IPO backlog continues to decline as just 25 issuers are seeking to make their market debut for expected proceeds of $2.9B. The comparable period last year had a 6-month backlog of 64 issuers looking to generate $8.8B in aggregate proceeds. The downward trend seems destined to continue, at least for a spell.

Here’s hoping that spell is broken before our next update.

Read the full Ipreo Quarterly US New Issuance Recap – Q4 2016