The Third Quarter’s IPO Market

The third quarter is often a tricky one for the IPO market.

Things tend to slow down in August, which creates a dip in any mid-year momentum, before September usually – hopefully – kicks things back into high gear. After the second quarter’s strong showing, particularly June’s big month, it would be a shame for vacation season to undo all that momentum, especially if July was able to maintain it.

Things did slow down, but not a ton. The summer months didn’t see as extreme a fall as in the third quarter of 2017. 50 IPOs came in for $12.0B, a mere four deals and $2.2B down from Q2. Moreover, 2018 saw a reasonable increase in both IPO proceeds and deal count as compared to the third quarter of 2017, realizing a 185.1% year -over-year increase in proceeds and a 92.3% on-year increase in deal count.

As usual, Healthcare lead the way in deal count, bringing in a total of 20 IPOs for $3.7B in proceeds. As this blog has been documenting for years now, Healthcare has long been at the top of the deal count numbers, with Technology coming in ahead of the pack in terms of proceeds. And the percentages are ridiculous. Since 2001, Healthcare deals have accounted for 23.7% of the market’s 2,571 IPOs, with Technology’s $143.4B (of $734.0B) accounting for 19.4% in total IPO proceeds.

Which isn’t to say other sectors haven’t played a part in 2018’s fast pace. The Consumer Goods sector lacks deal count, but it makes up for it in deal size, with its average deal proceeds ranking the highest across the market since 2001. Despite the Real Estate sector having the quarter’s highest deal size, Consumer Goods’ habit continued as it priced only two IPOs yet contributed $1.2B in proceeds in Q3.

As for where things stand moving forward, the 180-day IPO backlog shows 31 deals and $4.1B in expected proceeds. These figures are fairly typical for the quarterly backlog over the last few years, but do represent a significant decrease year-over-year, falling 52.0% from the $8.5B in proceeds seen in the third-quarter backlog for 2017.

Get all the details on the first quarter’s new issuance activity, including a deeper dive into the Consumer Goods sector, in the full Ipreo Quarterly US New Issuance Recap Q3 2018