A Look Back And Ahead
The U.S. IPO market of 2013 ranks as the best one in a decade
and sets the stage for another dynamic year in 2014.
Some 222 initial public offerings raised $55 billion in 2013,
the most in both categories since 2000, according to IPO research
and investment firm Renaissance Capital.
These includeTwitter (
) -- the biggest tech IPO sinceFacebook (
) -- andHilton Worldwide (
), the biggest IPO ever for a hotel company and the second
largest of 2013.
The largest IPO of the year wasPlains GP Holdings (
), which raised $2.8 billion.
The year also saw six stocks jump more than 100% on their
first day of trading, as many as the prior seven years combined.
The top first-day performer wasSprouts Farmers Market (
), up 123% on day one.
Initial public offerings are an integral part of U.S economic
growth and employment. Whether the IPO market will continue to
boom, as always, depends on economic growth and the performance
of equity markets.
"If the stock markets stay healthy I expect at least as many
IPOs in 2014 as last year," said Jay Ritter, Cordell Professor of
Finance at University of Florida, who closely tracks the IPO
Waiting At The Gate
Currently 38 companies are registered to go public and seek to
raise $6.5 billion, according to market intelligence firm
The IPO pipeline is likely much larger, though. A provision of
the Jobs Act of 2012 allows companies with sales of less than $1
billion to begin the IPO registration process while keeping it
confidential until about a month before the IPO actually
The biggest IPO on the horizon is China e-commerce giant
Alibaba Group, with its IPO likely to exceed the Facebook
blockbuster in May 2012 that raised $16 billion.
This year apparently won't see the recently planned IPO of car
manufacturer Chrysler Group that was expected to exceed $10
billion. Chrysler's IPO may have died on Jan. 1 when Fiat
disclosed that it would buy the 41.5% of Chrysler shares owned by
a United Auto Workers trust, giving Fiat 100% ownership.
But a large number of fast-growing technology firms are
expected to launch.
"2014 looks to be a strong year for tech IPOs," said Anand
Sanwal, CEO of research firm CB Insights. "There seems to be
momentum on multiple fronts."
In a recent report, CB Insights counted 590 investor-backed
private technology companies in the U.S. with valuations, "real
or rumored," of more than $100 million, up from 472 a year
"There's some frothiness, but there are still some very
credible solid companies that will test the water this year,"
Of those 590 companies, e-commerce is the most popular sector,
followed by online ad technology management.
Can Alibaba Top Facebook?
Alibaba has the potential to be one of the biggest technology
IPOs of all time. Founded in 1999 by Jack Ma, Alibaba is China's
largest e-commerce company, with businesses similar toAmazon.com
),eBay (EBAY) and other players.
Alibaba comprises nine companies. They include shopping sites,
a payment-processor business similar to PayPal, coupon sites and
a search engine site. It also has a cloud-computing business and
a business-to-business site.
According to projections by research firm PrivCo, Alibaba's
projected offering could exceed $18 billion, with the company
achieving a market valuation near $110 billion.
Facebook, the largest tech IPO and second-largest U.S. IPO
ever, raised $16 billion and had a market capitalization in its
first trading day of $104 billion. PrivCo estimates Alibaba will
have sales of $6.85 billion this year, up 68%. The IPO is
expected to launch in the first quarter.
Another company that would draw lots of interest is Pinterest,
the website where users -- in a process termed "pinning" -- post
photos, images and other kinds of content to their profile pages,
which other users can follow. Pinterest recently completed a $225
million funding round, giving it a valuation of $3.8 billion.
Other high-profile tech firms expected to conduct IPOs include
Square, which provides various payment-processing services for
mobile phones and tablets. In September 2012, Square raised more
than $200 million in a financing round that reportedly valued the
company at $3.35 billion. According to reports, it is seeking
another round of financing that would give it a $5 billion
Others include Box and Dropbox, both providing cloud-based
storage and file-sharing services for business and consumers. The
list of tech companies also includes music-playing website
Spotify and lodging rental website Airbnb.
Other notable companies expected to go public in 2014,
according to Renaissance Capital, include CBS Outdoor America,
one of the largest providers of billboard advertising, and
Univision Communications, the Spanish language U.S. broadcaster.
Later in the year Virgin America, the low-fare airline partly
owned by British billionaire Richard Branson, also aims to launch
Expectations for the IPO class of 2014 are heightened by
2013's fourth-quarter market performance. There were 77 IPOs in
the quarter, up 22% from the 63 in the third quarter and up 103%
from the year-earlier quarter, according to
"The environment for IPOs has remained highly accommodative
and we expect the new issuance window to remain open as we head
into 2014," said Henri Leveque, in a statement accompanying PwC's
latest IPO report.