IPO Market Expected to Pick Up for Rest of 2013

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BDO USA has released its 2013 BDO IPO Halftime Report, signaling that the market for initial public offerings should remain strong. Some 64% of the 100 capital markets executives surveyed at leading investment banks actually expect that IPO activity in the United States will increase further during the second half of 2013. The overall forecast is for a 7.7% gain in the number of U.S. IPOs during the second half of the year.

Also in the survey, some 30% projected that IPO activity will remain flat with the first half of the year, while only 6% predicted a decrease in the number of deals.

Of the coming offerings, the average is expected to be $265 million in size. That means approximately $41 billion in total IPO proceeds will have been seen on U.S. exchanges in 2013.

BDO’s findings show that the number of offerings is up significantly. If you exclude last year’s Facebook IPO, the total proceeds from IPOs would have been up by almost 50% from a year ago. Some key drivers are previously postponed offerings that were able to come to market and low interest rates driving investor demand for higher yielding assets. Another boost is the carry-on effect, where positive performance of early IPOs encourages other companies to follow with an IPO, as well as venture capital backers wanting to or needing to cash out.

The financial sector has led all industries in U.S. IPOs so far this year. Health care and technology were second and third. Some 75% of investment bankers predict more tech offerings during the second half, while 72% see an increase in energy sector IPOs. Other top sector IPO increases are expected in health care, real estate and biotech.

To come up with the survey results, BDO examined the opinions of 100 capital markets executives at leading investment banks. The survey was conducted during the month of June 2013.