The August 2013 IPO market flourished in the first half of the month before almost completely shutting down, as it traditionally does, during the last two weeks. The month produced 15 IPOs—almost 70% above the August average over the past 10 years and equal to the monthly tally in August 2007, the recent high point for August IPOs. Since 2000, there have been a total of only four IPOs in the two weeks prior to Labor Day.
Gross proceeds were $3.11 billion in August, bringing year-to-date gross proceeds to $22.53 billion.
The number of IPOs in 2013 year-to-date has now passed the full-year total of 97 IPOs in 2011 and is only one shy of the 102 IPOs in all of 2012. With the arrival of fall, the IPO market appears poised to resume its brisk pace, with a number of companies already on the September calendar.
The IPO market remains dominated by emerging growth companies (EGCs), accounting for 78% of all IPOs in the first eight months of 2013—similar to the 76% market share for EGC IPOs in 2012 following the enactment of the JOBS Act in April 2012.
VC-backed and PE-backed company IPOs accounted for 42% and 33%, respectively, of all IPOs in the first eight months of the year.
After the surge in life sciences IPOs over the first seven months of 2013, August saw only a trio of new life sciences offerings—two pricing below the initial price range. Filing activity for life sciences companies, however, remains brisk with six new filings in August. Year-to-date there have been 31 life sciences IPOs—31% of the year’s total.
The median deal size of $101.2 million for the first eight months of 2013 was 7% higher than the $94.3 million median in full-year 2012. The median deal size for VC-backed companies was $77.8 million—the lowest level since the $72.0 million median in 2006—while the median deal size for non-VC backed companies was $217.5 million—almost a third higher than the 2012 figure. The median deal size for EGCs, at $80.5 million, was less than a fifth of the $436.3 million median deal size for other companies.
The median annual revenue of IPO companies in 2013 remains well below the 2012 level, in part due to the high percentage of life sciences companies going public. Median annual revenue decreased 37%, from $133.6 million in 2012 to $84.3 million in 2013 to date—the lowest level since the $74.5 million median in 2007. Life sciences companies going public so far this year had median annual revenue of just $15.5 million. EGCs completing IPOs year-to-date had median annual revenue of $53.4 million, compared to $2.36 billion for other companies.
The average IPO in the first eight months of 2013 saw a 17% first-day gain from its offering price—just eclipsing the average 16% first-day gain for full-year-2012. Year-to-date, 29 companies—29% of the total—have produced a first-day gain of at least 25%. Eleven IPOs enjoyed a first-day gain of at least 50%, including five IPOs by life sciences companies. On the other end of the spectrum, 24 IPOs have been “broken” (IPOs whose stock closes below the offering price on their opening day), compared to 20% in all of 2012. Only two of the 14 IPOs in August 2013 were broken, with a further one flat on its first day.
The percentage of profitable companies going public has drifted down from 55% in 2012 to 46% in 2013 year-to-date, with only 16% of the life sciences companies completing IPOs showing a profit in their most recent fiscal year.
At August month-end, the average 2013 IPO was trading up 33% from its offering price, and 46% of the year’s IPOs were trading 25% or more above their offering price, including 28% up more than 50% from their offering price. The average IPO in the first eight months of 2013 has gained 13% from the first-day close to August month-end.
August IPO activity consisted of offerings by the following companies listed in the order they came to market:
- Athlon Energy, a private equity–backed independent oil and gas exploration and production company operating in the Permian Basin, priced at the top of the range and saw a first-day gain of 38%.
- Control4, a provider of home automation and control solutions, priced at the midpoint of the range and ended its first day up 25%.
- Marrone Bio Innovations, a producer of bio-based pest management and plant health products, priced an IPO upsized by 13% below the range and produced a first-day gain of 15%.
- YuMe, a provider of digital video brand advertising solutions, priced below the range and ended its first day flat.
- Fox Factory Holding, a private equity–backed designer, manufacturer and marketer of high-performance suspension products used on mountain bikes and off-road vehicles, priced at the top of the range and saw a first-day gain of 24%.
- Intrexon, which is developing synthetic biology technologies to improve drugs and food, priced an IPO upsized by 20% at the high end of the range and ended its first day up 55%.
- Cvent, a provider of a cloud-based enterprise event management platform, priced above the range and enjoyed a first-day gain of 57%.
- Frank’s International, a global provider of tubular services to the oil and gas industry, priced above the range and gained 20% on its first day.
- MiX Telematics, a global provider of fleet and mobile asset management solutions delivered as software-as-a-service, priced at the top of the range and saw a first-day gain of 13%.
- Stock Building Supply Holdings, a private equity–backed diversified lumber and building materials distributor and solutions provider, priced an IPO downsized by 21% below the range but produced a first-day gain of 3%.
- China Commercial Credit, which provides loans and loan guarantee services to small to-medium sized businesses in the Jiangsu Province of China, priced an IPO downsized by almost 50% and declined 2% on its first day only to double in trading the following day to end its second trading day 95% above its offering price.
- Envision Healthcare Holdings, a private equity–backed provider of physician-led, outsourced medical services, priced an IPO upsized by 20% at the top of the range and saw a first-day gain of 9%.
- Bermuda-based Third Point Reinsurance, a private equity–backed property and casualty reinsurer, priced an IPO trimmed by less than 1% at the low end of the range and traded up 4% on the first day.
- Sophiris Bio, a clinical-stage biopharmaceutical company focused on developing innovative products for the treatment of urological diseases, priced an upsized IPO at a lower revised price maintaining expected proceeds, and declined 17% on its first day.
- Regado Biosciences, a biopharmaceutical company focused on the discovery and development of novel, first-in-class, actively controllable antithrombotic drug systems for acute and sub-acute cardiovascular indications, priced an upsized IPO below a downwardly revised price and saw a first-day gain of 18%.