The US IPO market produced 102 IPOs in 2012—a 5% increase from the 97 IPOs in 2011. Before drying up in mid-May, IPO activity was at the highest level for the comparable period since 2007. Although deal flow picked up in the fall, the fourth quarter tally in 2012 was the lowest since 2002.
Gross proceeds increased 22% from $28.7 billion in 2011 to $35.1 billion in 2012, primarily due to Facebook’s $16 billion offering—the third largest IPO in US history. The two other billion-dollar IPOs of 2012 came from Mexican financial services company Santander ($2.9 billion) and real estate services company Realogy ($1.08 billion).
Median IPO size declined 33% from $140.4 million in 2011 to $94.3 million in 2012, reflecting an increase in the number of VC-backed IPOs, which tend to be smaller. The number of IPOs in the United States by US issuers increased from 42 in 2011 to 51 in 2012. Median IPO size in 2012 was similar to the $97.9 million median in 2010, when there was a resurgence of VC-backed IPOs.
The average first-day gain for all IPOs in 2012 was 16% compared to 14% in 2011, and was the highest such figure since 2000. In 2012, 20% of all IPOs were “broken” (IPOs whose stock closes below the offering price on their opening day) compared to 26% in 2011. The percentage of broken IPOs in 2012 was the lowest since 2003, when the IPO market was open to only the most select companies.
There was only one “moonshot” (an IPO that doubles in price on its opening day) in 2012. Enterprise software company Splunk saw its stock price jump 109% in first-day trading.
Aftermarket performance rebounded in 2012, following a weaker showing in 2011. The average 2012 IPO gained 22% from its offering price by the end of the year, with 64% of the year’s IPOs trading at or above their offering price at year-end. In contrast, the average 2011 IPO lost 13% from its offering price by the end of 2011, with only 39% of the year’s IPOs trading at or above their offering price at year-end 2011. The average IPO gained 14% from first day close to year-end in 2012 compared to an 18% decline in 2011.
The percentage of profitable companies going public increased from 51% in 2011 to 55% in 2012—despite the increase, this was still the lowest percentage since 2001. The median annual revenue of IPO companies increased 35%, from $98.7 million in 2011 to $133.6 million in 2012. These results continue to reflect the traits of a bifurcated IPO market, with larger and more profitable companies on one end of the spectrum and smaller venture-backed and technology companies on the other.