Last year was not a good year for initial public offerings. Only 128 companies managed to IPO compared with the 154 that did in 2011 and the long term average of nearly 200 per year. The median proceeds raised by IPOs fell by 23% and 40% of companies ended up worth less than their initial price ranges.
2013, however, may be a turnaround year for companies new to the stock market says Jeff Corbin, CEO of investor relations firm KCSA.
KCSA’s 3rd annual strategic communications survey polled 50 leading securities attorneys whose firms were responsible for 87% of major initial public offerings in 2012 and found that things are looking up. More than one-third of respondents said they believe the IPO market will be stronger in the coming year, the highest percentage reported in the poll's history.
IPOs in 2012 were marred by fiscal cliff uncertainty and over-hyped social media names, says Corbin. According to KCSA’s survey 59% of respondents said the fiscal cliff was a perceived driver for economic instability and 66% surveyed said the social media bubble had burst, largely due to Facebook’s (FB) ill-fated public offering.
Facebook’s disastrous IPO in May of 2012 had lasting effects on the market. 89% surveyed said Facebook would cause all social media companies valuations to be lower. Last year 93% of respondents said Facebook was the most anticipated IPO of the year while this year 86% were unsure. Not having one standout IPO lowers volatility and is better for the market as a whole, says Corbin.
Beyond the resolution of the fiscal cliff, easing of the Eurozone crisis and increasing consumer confidence, the 2012 JOBS Act is creating a better market for IPOs, says Corbin. The act allows companies to file for IPO confidentially and to pre-market their offerings before officially filing with the Securities and Exchange Commission.
94% of respondents said they have seen an increase in the number of confidential filings since the act passed. The JOBS Act allows a company to avoid public scrutiny and keep competitive information quiet while testing the market.
So which industries will dominate the IPO market in 2013?
Look to technology, says Corbin.
41% of securities lawyers surveyed said the tech industry would have the most public offerings this year. Trailing a ways behind tech was energy with 24% of respondents ranking the industry at number one and then healthcare with 8% of the vote.
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