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June 3, 2016

By James Clark

$1.7bn: May 25 IPO issuance highest in 2016

Five US listed IPOs priced on May 25, raising $1.7bn. May 25, 2016 marks the highest daily activity so far this year, compared to 2015’s high of six IPOs priced on June 24.

Although US listed IPO volume has fallen 49% year‐on‐year to $7.1bn in 2016, monthly issuance has picked up. May IPO volume of $3.4bn is at a seven‐month high, followed by April 2016 ($2.5bn). May activity totals 17 deals so far, the highest since July 2015 (19 deals). With an uptick in monthly issuance, 2Q issuance already stands at $5.9bn via 25 deals, compared to only $1.2bn via nine deals in 1Q 2016.

Three financial sponsor backed IPOs

Three US listed IPOs (US Foods, Cotiviti Holdings, and GMS) that priced on May 25 were backed by financial sponsors (FS), accounting for 30% of total FS related IPO activity so far this year (10 deals). Although FS activity has picked up to 10 deals in 2016, it’s still the lowest activity since the same period in 2009 (four IPOs).

The average one‐day return for US listed FS related IPOs is 12% in 2016 YTD, compared to 17% in the same period of 2015 (23 deals).

US Foods: second $1.0bn+ US IPO

KKR and Clayton Dubilier & Rice backed US Foods raised $1.0bn via an IPO on May 25, marking the second largest US listed IPO so far in 2016 and the largest FS related IPO since First Data ($2.8bn) in October 2015. It’s the largest US listed food & beverage IPO in 15 years, ahead of Blue Buffalo ($778m) in July 2015. The deal priced at $23 on the top of its filing range ($21 ‐ $24), and jumped 8% on its first day of trading, marking the biggest one‐day return for $500m+ IPOs so far in 2016.

$238m: biggest technology IPO in 2016 YTD

On May 25, Cotiviti Holdings raised a $238m IPO, the largest technology IPO so far this year. It’s the first technology IPO to list on the NYSE since Yirendai in December 2015. Cotiviti Holdings dropped by 10% on its first day of trading.

US listed technology IPO issuance ($570m via four deals) has fallen 67% to the fourth lowest YTD volume after 2003 ($90m), 2008 ($109m) and 2009 ($511m). Average YTD volume in the last five years is $7.5bn.