There’s a ‘mini-boom’ going on in the IPO space, according to an analysis by Ernst & Young. The first quarter of 2011 was ‘dominated by some of the largest private equity-backed initial public offerings‘ in the market’s history, reports AltAssets, and the listing pipeline for the rest of the year appears to be robust.
The amount of capital raised by private equity-backed companies going public may have doubled year over year, but that doesn’t mean the first quarter was without its challenges. A few companies yanked their IPO plans because of factors such as the earthquake in Japan.
So, what happened in the private equity market in the first quarter of 2011? Let’s look at five highlights:
1. Double the capital on lower deal volume: the number of private equity-backed companies listing in the first quarter reached 20, compared to 27 in the first quarter of 2010. The amount of capital raised, however, nearly doubled. In the first quarter last year, $7.2 bn was raised, compared to $13.5 bn for the same period this year.
2. Shattered records: the largest private equity IPO came in the first quarter of 2011 … twice. Kinder Morgan raised $3.3 bn on the NYSE in February, though it was topped the following month by HCA ($4.4 bn).
3. Resistance to risk: the strong first-quarter IPO activity came even in the face of conflict in the Middle East and natural catastrophes in Japan. Geopolitical volatility, AltAssets reports, which came in the second half of the first quarter, wasn’t sufficient to derail the IPO ambitions of private equity-backed companies.
4. But there could have been more: the strong IPO performance in the first quarter of the year doesn’t mean the market couldn’t have done better. Eight companies backed by private equity firms, according to the report, either postponed or canceled their IPOs, ‘four of them directly citing events in Japan.’
5. More to come: it looks like there’s momentum. After a strong first quarter, several companies are set to go public this year, including Freescale Semiconductor and Dunkin’ Brands. Toys ‘R’ Us, which was on the list in the Ernst & Young study, is rethinking its IPO because of market conditions.