IPO Commentary
September 8, 2009
Financial Crisis Shapes US IPO Rebound
While the IPO market has taken the first steps toward healing, a glimpse into the growing pipeline reveals that the path to full recovery will be different than those that followed prior economic downturns. As the IPO market rebounded from a moderately deep recession in 1991, the leading industry sectors were business services, technology, retail and health care. Remember Broderbund Software, Checkers Drive-In, KooKooRoo and MedImmune?
Today, the tech, healthcare and retail growth stories that have driven past market revivals have been conspicuously absent from the latest wave of IPO hopefuls. This makes sense, given the historic consumer shut-down and the anti-business and investment rhetoric emanating from Washington. In their place, there is a pool of unusual candidates shaped by an era of cheap credit and the unprecedented mortgage crisis that followed. At least for the near term, it appears that the IPO market will be dominated by opportunistic investment vehicles and businesses from the mid-decade buyout bubble.
- After an uptick in filing activity, there are 67 companies in the active IPO pipeline, up from 29 in March 2009
- Mortgage REITs represent 19% of the active IPO pipeline
- 12 of the last 26 IPO filings have been from private equity portfolio companies
- Filings from mature companies with familiar stories reflect lingering risk aversion
- Venture-backed names have dwindled to less than 10% of the active pipeline