Biotech and communications sectors lead in U.S. listings; European IPO activity surges but listings by non-U.S. companies here are flat
IPO activity remained strong during the first quarter of 2005, with average deal size increasing 25 percent from $201.1 in 2004 to $251.4 million in 2005, according to PricewaterhouseCoopers’ U.S. IPO Watch, a survey of IPO activity on U.S. stock exchanges. While the same number of IPOs – 43 – occurred during the first quarters of 2005 and 2004, the total value of these deals rose from $8.6 billion to $10.8 billion. This is in sharp contrast to the first quarter of 2003 when only six IPOs were announced, for a total value of $1.6 billion.
“This appears to confirm our observation at the end of last year that larger, more established companies have returned to the U.S. capital markets,” said Scott Gehsmann, North American leader of PricewaterhouseCoopers’ Global Capital Markets Group. “Despite the increase in average deal size, capital-raising was less concentrated this year: Only one IPO raised more than $1 billion, compared with two last year; the top five IPOs accounted for 42 percent of the capital raised this year, compared with 61 percent during the first quarter of 2004; and the median deal size rose to $123 million from $85 million.”
The top ten IPOs for the first quarter of each year are as follows:
Gehsmann pointed to four other key trends uncovered in the U.S. IPO Watch analysis of first-quarter 2005 activity:
- Biotechnology and communications were most active. For biotech, this reflects fewer but larger transactions – six, valued at $699 million – compared with eight last year, valued at $549 million. For communications, IPOs by companies like PanAmSat Holding Corp., Fairpoint Communications, and Valor Communications brought a sharp increase in both the volume and value of IPOs – six deals, valued at $2.2 billion, compared with one $80 million deal last year. Chemicals and metals, with no activity in Q1 2004, raised the most money this quarter: $2.7 billion in three IPOs, including two of the quarter’s top three deals – Huntsman and Celanese. Three sectors that were active last year – healthcare, semiconductors and utilities – had no first quarter activity this year.
- The NYSE and NASDAQ jostle for listings. The NYSE’s share of listings grew to 40 percent this year, compared to 30 percent last year, while NASDAQ’s share fell from 70 to 53 percent. Although the NYSE transactions were much larger, their average offering value fell slightly, from $495 to $482 million, while the average offering value of NASDAQ IPOs increased significantly, from $74 to $112 million. AMEX, which had no activity in Q1 2004, reported three transactions this year, averaging $17 million each.
- Activity by non-U.S. companies is flat. Only three of the IPOs announced in the first quarters of both years involved non-U.S. companies, with proceeds of $389 million this year, compared with $2.1 billion in 2004. However, the 2004 number reflects the impact of Semiconductor Manufacturing, which raised $1.8 billion in the year’s second-largest IPO.
- European activity surges, but value declines. Companies raised $7.5 billion in 96 IPOs on European exchanges this year, compared with 56 deals raising $6.5 billion in Q1 2004. However, proceeds from the average deal fell from $116 million in 2004 to $78 million this year.
U.S. IPO Watch is a quarterly survey of all IPOs listed on U.S. exchanges. These include IPOs by domestic and foreign companies, best-efforts, business development companies, filings with the FDIC, and bank demutualizations. IPOs do not include unit investment trusts and fully classified closed-end funds. This survey captures IPOs listed between January 1, 2005 and March 31, 2005. Visit our website, www.pwc.com/ustransactionservices, for our 2004 U.S. IPO Watch report.
The Global Capital Markets Group advises a wide range of U.S. and non-U.S. companies on entering the U.S. and overseas capital markets. Our worldwide network of transaction specialists supply U.S. and non-U.S. corporations and private equity firms with transaction support, project management services, assistance in resolving technical accounting issues, and advisory support and guidance on the S.E.C. registration process. The Global Capital Markets Group is part of the Transaction Services group of PricewaterhouseCoopers, which offers dedicated deal teams operating from 16 U.S. cities and some 90 locations in North America, Latin America, Europe and Asia.
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