The IPO market cooled in November to produce only a trio of IPOs, the slowest November since the height of the global financial crisis in 2008. The first eleven months of 2016 have produced 91 IPOs—39% below the 150 IPOs over the corresponding period of 2015.
Gross proceeds for November were a paltry $338.2 million. The first eleven months of 2016 have produced gross proceeds of $16.64 billion, 32% below the $24.63 billion raised over the first eleven months of 2015.
IPOs by emerging growth companies (EGCs) have accounted for 84% of the year’s IPOs, down from 93% in 2015. Since enactment of the JOBS Act in 2012, 85% of all IPOs have been by EGCs.
The median offering size for all IPOs over the first eleven months of 2016 was $94.5 million, or 3% above the $91.7 million figure for all IPOs in 2015, while the median offering size for life sciences company IPOs was $58.3 million, less than half of the $130.0 million figure for non-life sciences companies.
Year-to-date, the median offering size for IPOs by EGCs was $82.0 million, compared to $346.5 million for non-EGCs. From 2012 to 2015, the median EGC IPO offering size was $87.0 million, compared to $425.5 million for non-EGCs.
The median annual revenue of IPO companies through the first eleven months of 2016 was $62.9 million, or two-thirds above the $37.8 million median figure for 2015, but well below the $92.7 million median figure for the five-year period from 2010 through 2014. The median life sciences IPO company in the first eleven months of 2016 had annual revenue of $3.1 million, compared to $197.3 million for all other IPO companies.
EGC IPO companies over the first eleven months of 2016 had median annual revenue of $39.0 million, compared to $1.50 billion for non-EGC IPO companies. The median annual revenue for non-life sciences EGC IPO companies has remained largely unchanged over the past three years, inching up from $105.4 million in 2014 to $105.7 million in 2015 and to $105.9 million thus far in 2016.
Over the first eleven months of 2016, 35% of IPO companies have been profitable, compared to 30% in 2015 and 36% in 2014, but well below the 54% figure that prevailed over the five-year period preceding 2014. Excluding life sciences companies, 53% of IPO companies over the first eleven months of 2016 have been profitable, just shy of the 55% over the five-year period preceding 2016.
Through November 30, the average 2016 IPO has produced a first-day gain of 13%, compared to 16% in 2015 and representing the lowest annual figure since 2010. The average 2016 life sciences IPO company has gained 7% in first-day trading, compared to 17% for all other 2016 IPO companies.
Over the first eleven months of 2016, 25% of IPOs have been "broken." This figure is down from 26% in 2015 and 27% in 2014.
As of the end of November, the average 2016 IPO company was trading 30% above its offering price. At November 30, one-quarter of 2016 IPO companies were trading below their offering price, while 46% were trading at least 25% above their offering price. The average 2016 life sciences company ended November up 23% from its offering price, while the average non-life sciences IPO company ended the month 35% above its offering price.
IPO activity in November consisted of offerings by the following companies listed in the order they came to market:
- GDS Holdings, a leading developer and operator of high-performance data centers in China, priced below at the range and produced a first-day gain of 4%.
- Smart Sand, a pure-play, low-cost producer of high-quality Northern White raw frac sand, which is a preferred proppant used to enhance hydrocarbon recovery rates in the hydraulic fracturing of oil and natural, priced below the range and ended its first day of trading one cent shy off its offering price.
- Motif Bio, a clinical stage biopharmaceutical company engaged in the research and development of novel antibiotics designed to be effective against serious and life-threatening infections in hospitalized patients caused by multi-drug resistant bacteria, priced below the originally expected price and declined 19% in first-day trading.