Q1 2017 IPO Recap

The first quarter of 2017 was fairly eventful for the IPO market. Especially compared to the start of last year.

Ipreo has been paying close attention to to the ups and downs of the new issuance market as it attempts to bounce back from a disappointing 2016. We’ve watched as investors reacted to the installation of a new U.S. President, we’ve weathered a February freeze, and we’ve taken the temperature of a suddenly ailing Healthcare sector. But how did the first three months of the year fare as a whole?

The silver lining to 2016’s down year was that there is nowhere to go but up, and thus far the trajectory has been fairly promising. The first IPO of 2016 took more than a month to arrive, and the first quarter saw a meager total of 6 IPOs hit the market, generating a sum of $582M. 2017’s output nearly quadrupled that number as the IPO market welcomed 22 debuts, for a total of $10.9B in proceeds.

The big story of the first quarter, and one our Quarterly IPO Recap delves into in detail, is the Technology sector’s late surge. Four Tech IPOs arrived in the first quarter, all of them in March, including the year’s biggest IPO, from Snap Inc. It took only one quarter, and, thanks to the $3.9B raised by the company behind the social media sensation Snapchat, a single IPO, for the Tech sector to outpace 2016’s total proceeds. Last year’s 18 Tech IPOs raised $2.9B; through March 2017, the sector has already brought in $4.6B.

Despite the quarter’s performance against the first few months of 2016, the 22 IPOs represent a decline from Q4 2016, which brought 25 debuts to market, although that quarter generated $2.5B less in proceeds.

Breaking down the quarter’s IPOs by sector, Energy led the charge in terms of deal count as five issuers priced offerings, led by Keane Group, Inc. which raised $584.7M in proceeds. The aforementioned Technology sector took the top spot in terms of proceeds.

Here’s some pricing performance info from the US New Issuance Quarterly Recap for Q1 2017:

Q1 of 2017 brought in a total of22 IPOs seeing an average of a 10.6% gain in the first day of trading. Comparatively, Q1 of 2016 saw only six deals price with a flat reading for average first-day performance. From a monthly standpoint, March took the top spot in terms of first-day performance with an average first-day pop of 18.7%. This was more than double the average first-day performance seen in January or February which saw average first-day increases of 4.4% and 7.7%, respectively. Of note, the largest first-day pop came from Technology issuer MuleSoft, Inc. which jumped 45.6% in its first day of trading. Conversely, the steepest first-day decline came from ObsEva S.A. with a loss of 22.3% in its first day on the open market.
As for what’s to come, the backlog isn’t exactly overflowing. The current 6- month IPO backlog’s 33 issuers for expected proceeds of $4.5B lags behind last year’s comparable period that had 41 issuers looking to generate $6.5B in aggregate proceeds. Industrials issuer Schneider National, Inc. leads the pack, expecting to bring in $550.0M, while Consumer Goods issuer JBS Foods International B.V. trails behind in second with $500.0M.

For more information on the quarter’s IPO activity, plus a recap of follow-on activity and industry highlights, read Ipreo’s full US New Issuance Quarterly Recap for Q1 2017.