Bard notes that “investors have been quite vocal in what they are looking for, which is secular growth, a strong business model, and a large market opportunity and trading liquidity.” Investors have also been sensitive to IPO prices, “with virtually 50% of all IPOs year-to-date pricing below their originally anticipated range,” Bard comments. IPOs for semiconductor companies have fared the worst so far this year.
Still, Renaissance Capital reports that IPO filings are up fourfold to date, as the backlog reaches its highest level since 2007, indicating increased activity for both issuers and investment banks.
The number of deals coming through is increasing, with six companies filing last week alone, reports Lynn Cowan for The Wall Street Journal. U.S. IPOs have averaged 7.2% on first-day gains so far this year while Chinese issuers have averaged 11.7% returns. Currently, 105 IPOs are registered with the Securities and Exchange Commission, compared to 38 in 2009.
For more information on the IPO market, visit our IPOs category.
- First Trust IPOX-100 Index Fund (NYSEArca: FPX) is up 9.4% in the last three months; its top holdings include Visa (NYSE: V), Philip Morris (NYSE: PM) and Time Warner Cable (NYSE: TWC); its top two sectors are consumer discretionary (35%) and financials (19.8%); energy gets 12.7%. Technology accounts for 6.7% of the ETF.