Second quarter global IPO proceeds have tumbled 37%
year-over-year despite Facebook's $16 billion listing, putting
the global IPO market at its lowest year-to-date issuance levels
since 2009. North America accounted for over 50% of issuance.
Excluding Facebook however, North American proceeds dropped over
50% year-over-year. Asia Pacific remained the most active region
with 47% of IPOs even though quarterly proceeds are down more
than 50% from last year. Despite the sharp decline in proceeds,
IPO returns were surprisingly strong in 2Q12, up 12% on average.
China's A-share market drove IPO returns, generating average
returns of 29% helped by the expectations of loosening foreign
ownership restrictions.
US IPO Market Hits a Facebook Freeze
Following the second busiest April in a decade for pricings,
Facebook's May debut was suppose to prove that US IPOs were back
on course. Instead, a mismanaged offering and heightened market
volatility led to an abrupt, month-long shutdown. US IPO activity
fell 41% year-over-year, the second lowest level since the 1Q10.
Some of the top performers were small cap technology growth
stories, including big data companies Splunk (
SPLK
): +66% from offer price, Infoblox (
BLOX
): +30% and Proofpoint (
PFPT
): +20%. Overall, US IPOs outperformed the market (+4% average
return vs. -7% for the S&P 500), helped by above average IPO
discounting (nearly half the deals priced below the range).
Excluding the first day pop, aftermarket returns were weak (-6%)
as cyclical companies, including Edgen (
EDG
): -31% and PetroLogistics (
PDH
): -38%, weighed on results.
IPO Benchmarks Generate Lackluster Returns in
2Q12
The FTSE Renaissance Global IPO Index underperformed global
equity benchmarks in the second quarter, generating a -13% return
(MSCI ACWI; -10%). Second quarter performance was equally weak in
the US, as the FTSE Renaissance US IPO Index underperformed the
Russell 3000, generating a -16% return in 2Q12 (Russell 3000;
-7%). Key detractors from index performance this quarter were
major index constituents Facebook (FB): -16% in 2Q12, General
Motors (GM): -22%, NXP Semiconductors (NXPI): -22%, and Zynga
(ZNGA): -54%.
