Global IPO Market Turns Unfriendly in 2Q12


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.

global ipos

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.

us ipos

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%.

index performance

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: News Headlines , IPOs

Referenced Stocks: BLOX , EDG , PDH , PFPT , SPLK

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