IPO Pipeline Accelerates in 2010.

Well that's according to Ernst and Young and the article is reprinted from PR NewsWire. What's really interesting is that US capital markets are attracting more international deals, with 8 IPO registrations from China-based companies.

IPO Pipeline Nears Record Volume, Dollars, According to Ernst & Young LLPNew entrants make up majority of deals thanks to active IPO market Press Release Source: Ernst & Young LLP On Monday August 2, 2010, 9:17 am EDTNEW YORK, Aug. 2 /PRNewswire/ -- The number of companies registering to go public surged in Q2 of 2010, reminiscent of the boom times in 2007.  Quarter over quarter, the pipeline jumped from 80 to 113 companies in registration seeking $25.3 billion, growing by 41%, according to the quarterly Ernst & Young LLP US IPO Pipeline study.

Companies who newly registered to go public in Q2 of 2010 represent a total of $20.6 billion, about 80 percent of the total pipeline. In addition to these new registrants, 37 IPOs went effective in Q2, reflecting strong IPO activity.  

"The resurgence of pipeline activity represents optimism about the growth of the economy and the markets.  We've also seen this in our recent Growth Company Leadership survey – 75% percent of senior executives were optimistic about achieving their companies' growth expectations over the next two years," says Maria Pinelli, Americas Director, Strategic Growth Markets, Ernst & Young LLP.  "Renewed interest from foreign growth companies, including Chinese companies, also demonstrates the attractiveness of US markets globally. These numbers are a great indicator."  

Average deal size also grew to $224 million from $142 million last quarter. The largest registrant, provider care company HCA Inc., registered for $4.6 billion and skewed the average upward. Perhaps more representative of a trend, 59 of the registrants seek $100 million or less.

"In 2009, much of the IPO activity came from large companies and spinoffs, and investors showed interest in these safe, mature businesses," says Pinelli. "This quarter's activity represents a willingness for smaller companies to use the capital markets to stimulate growth. Meanwhile, the markets are openly returning to their willingness to invest in risk for potential growth and reward."

Year over year IPO Pipeline comparison:



Time period

# of companies in
the Pipeline

Total dollar 
amount

Average deal size

# of effective IPOs

End of Q2 2007

97

$18.2 billion

$ 187.3 million

59

End of Q2 2008

80

$15.5 billion

$ 193.3 million

9

End of Q2 2009

28

$  7.6 billion

$ 272.0 million

10

End of Q2 2010

113

$25.3 billion

$ 224.0 million

37





"After the 27 companies that went public in the first quarter of 2010, the pipeline grew primarily because smaller companies – found in all industries – are gaining confidence that they can succeed in the capital markets and are ready to deliver on their promises," says Jackie Kelley, Americas IPO Leader, Ernst & Young LLP. "Even pre-pipeline, record numbers of companies are joining our IPO Readiness sessions to prepare their companies for the rigors of regulatory compliance and to help them meet investor expectations after going public."

The new registration of Tennessee-based HCA Inc surpasses the total dollars ($4.1 billion) sought by the technology sector's 22 deals in registration. Following technology, the industries with the highest volume of deals are professional services (17 companies seeking $2.9 billion) and pharmaceuticals (11 companies seeking $854 million).

Two other billion-dollar deals entered the pipeline this quarter, media and entertainment company Nielson Holdings B.V. (registered for $1.75 billion) and Netherlands-based technology firm KASLION Acquisitions B.V. (registered for $1.15 billion).

The U.S. capital markets are also attracting more international deals, shown by eight IPO registrations fromChina-based companies, two from the Netherlands and one from the Virgin Islands. Again, the interest fromChina is expanding with growth-oriented companies.

Among states, California leads deal volume with 21 companies seeking $2.4 billion followed byMassachusetts with nine companies seeking $1.6 billion and Texas, North Carolina and New York with seven companies each.

The Ernst & Young LLP U.S. IPO Pipeline analysis is issued quarterly as a forward-looking indicator of the IPO market.  The IPO Pipeline data is refined to eliminate bias from financial services organizations, real estate investment trusts and other holding companies that represent assets under management instead of core businesses.  It also eliminates any registrants sitting on the books for more than 12 months – long-term applicants that may bloat numbers, but don't reflect current market trends.  

About Ernst & Young's Strategic Growth Markets Practice

Ernst & Young LLP's Strategic Growth Markets (SGM) practice guides leading high-growth companies. Our multi-disciplinary team of elite professionals provides perspective and advice to help our clients accelerate market leadership. SGM delivers assurance, tax, transactions and advisory services to thousands of companies spanning all industries. Ernst & Young is the undisputed leader in taking companies public, advising key government agencies on the issues impacting high-growth companies and convening the experts who shape the business climate. For more information, please visit us atwww.ey.com/us/strategicgrowthmarkets, or follow news on Twitter at EYSGM.

About Ernst & Young

Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

For more information, please visit www.ey.com

Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

This news release has been issued by Ernst & Young LLP, a US client-serving member firm of Ernst & Young Global Limited.