Second-best start on record after 2000
US-listed IPOs stood at $11.9bn in the first 2 months of 2018, marking the second-highest volume on record after the same period in 2000 ($14.2bn). With stock markets indices—including S&P, Dow Jones, and Nasdaq—still near their all-time highs, and the VIX trending upwards to 19.85 at the end of February, some market participants are worried about another market crash like the one from 2000.
More mature companies in 2018
Though total market volume is similar to that of 2000, the deal details are different. Average deal size of the 77 US-listed IPOs in the first 2 months of 2000 was $185m and their average market cap was $851m, which indicated more companies at an earlier stage received funding. In contrast, average deal size of the 35 IPOs in the first 2 months of 2018 was $343m with an average market cap of $1.3bn, indicating more mature companies were listing.
Tech at the top again
In the first 2 months of 2000, as the dot-com bubble peaked, tech was the top sector by US-listed IPO volume. Telecom was second with $4.8bn via 16 deals, its highest volume on record. Since then, IPOs in the telecom sector have gone downhill, and zero telecom companies have listed in the US in the same period over the last 10 years.
Similarly, technology started out as the top sector by volume in the first 2 months of 2018. Finance followed with $2.1bn via 11 deals, boosted by the re-emerging popularity of blank check companies—accounting for 9 of those 11 IPOs.
Banks and the healthy pipeline
Though almost 20 years apart, the first 2 months of 2000 and 2018 have in common 8 of the top 10 bookrunners by US-listed IPO volume. Their presence also extends to the healthy pipeline of 35 US-listed IPOs. Among them are 5 SPACs, 9 tech companies—including unicorn Dropbox—and 12 foreign companies. The biggest IPO in the pipeline is iQiYi Inc, expected to raise $1.5bn via the Nasdaq.
– Written by Andy Ye, Dealogic Research
Data source: Dealogic, as of March 5, 2018