2018 IPO Market Is on Target to Exceed 2017


Priced IPOs H2 2018

Source: Bloomberg LP, as of July 6, 2018 

*Data is for priced initial public offerings of ≥ $1 million, listed on a U.S. stock exchange during the time period indicated.

IPOs Are Raising More Cash

A robust 136 IPOs priced in the first half of 2018, raising $37.72 billion, potentially surpassing 2017 numbers in both deal count and dollar amount raised. At the current rate, 2018 IPOs are on target to raise over $75 billion, far exceeding the $52.22 billion raised in 2017. The average deal size of 2018 IPOs has also increased from previous years. Average IPO size in the first half of 2018 was $277.4 million, up by 24% from $224.1 million in 2017 and by 50% from $185.5 million in 2016.

The three largest IPOs of the first half of 2018 were by: AXA Equitable Holdings Inc. (priced on May 9 and raised $3.16 billion), Pagseguro Digital Ltd. (priced on January 23 and raised $2.61 billion) and iQIYI Inc. (priced on March 29 and raised $2.42 billion).

Market Is Gravitating Towards Larger IPOs

In the first half of 2018, IPOs in the $1 - 100 million range represented a smaller percentage of total priced IPOs (37%), compared with the previous four years, indicating a trend toward fewer smaller-sized IPOs. 

IPO Offer Size H2 2018

Source: Bloomberg LP, as of July 6, 2018 

*Data is for priced initial public offerings of ≥ $1 million, listed on a U.S. stock exchange during the time period indicated.

In 2017 and in the first half of 2018, there was a sizable increase, compared with the previous three years, in the percentage of IPOs in the $100 - $500 million range. The first half of 2018 also witnessed a significant increase in the percentage of IPOs in the $500 million - $1 billion range (9% of all IPOs), a larger percentage than in the previous four years. These movements indicate a trend toward mid-to-large-sized IPOs, possibly signaling issuer unwillingness to engage in the IPO process unless it can generate significant funds.

Out of 136 IPOs in the first half of 2018, 50 or 37% were in the $1 - 100 million range by offer size, 68 or 50% were in the $100 - $500 million range, 12 or 9% were in the $500 million - $1 billion range and six or 4% were in the $1 - $10 billion range. Interestingly enough, although a few $1 billion + IPOs did hit the market over the last few years, the market has not seen a $10 billion + deal since 2014.

No Surprises in the Industry Sector Race 

IPO Industry Sectors H2 2018

Source: Bloomberg LP, as of July 6, 2018 

*Data is for priced initial public offerings of ≥ $1 million, listed on a U.S. stock exchange during the time period indicated.

In the first half of 2018, the Consumer, Non-Cyclical sector was the most active with 48 IPOs, and, as in the previous four years, outperformed the other industry sectors by number of IPOs. However, in terms of most capital raised, the Financial sector continued the trend from the previous two years, taking the top spot among the sectors and raising $10.4 billion in the first half of 2018.

In the first half of 2018, the Diversified sector continued the trend from 2017, replacing the Technology sector among the top three sectors by number of IPOs (20 IPOs). The Technology sector delivered 21 IPOs in 2015 and 16 IPOs in 2016, but was not in the top three sectors, by number of IPOs in either 2017 or the first half of 2018. However, for the first time since 2015, the Technology sector raised enough funds ($6.0 billion) to make the top three sectors, and the Consumer, Non-Cyclical sector came in third with $5.6 billion raised.

The top IPOs by dollar value in each of the three top sectors in the first half of 2018 were by: Corp America Airports SA (Consumer, Non-Cyclical sector, priced on February 1 and raised $486 million), GS Acquisition Holdings Corp. (Diversified sector, priced on June 7 and raised $690 million) and AXA Equitable Holdings Inc. (Financial sector, priced on May 9 and raised $3.16 billion).

SPAC IPOs Are Poised for an All-Time High

SPAC IPOs had another great quarter, pricing 11 IPOs in the second quarter of 2018. In total, 23 SPAC IPOs priced in the first half of 2018 and raised a total of $5.54 billion, on target to match or exceed even the peak numbers of 2017. SPAC IPOs have been on an upward trend since 2009 in both deal count and dollar amount raised. The dollar amount raised by SPAC IPOs in 2017 ($9.84 billion) jumped by 183% from 2016 ($3.48 billion) and by 152% from 2015 ($3.90 billion).

SPACs H2 2018

 Source: Bloomberg LP, as of July 6, 2018 

*Data is for priced initial public offerings of ≥ $1 million, conducted by special purpose acquisition companies (SPACs) and listed on a U.S. stock exchange during the time period indicated. A SPAC is a type of blank check company that pools funds to finance M&A transactions.

In the first half of 2018, SPAC IPOs represented 17% of the total IPO market by deal count and 15% of the total IPO market by dollar amount raised.

The three largest SPAC IPOs in the first half of 2018 were by: GS Acquisition Holdings Corp. (priced on June 7 and raised $690 million), Far Point Acquisition Corp. (priced on June 11 and raised $633 million) and Pure Acquisition Corp. (priced on April 12 and raised $414 million).

The law firms that were most active in the SPAC IPO space in the first half of 2018 were Ellenoff Grossman & Schole (12 IPOs), Graubard Miller (7 IPOs) and Maples and Calder (7 IPOs).

With additional data analysis by Tom Shen.

For more information on IPO performance, Bloomberg Law subscribers can access the Quarterly IPO Market Update in the Securities Practice Center.