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Renaissance Capital's 3Q 2014 US IPO Market Review

October 1, 2014

3Q 2014 IPO Market All About BABA and Biotechs
The US IPO market raised $37 billion in the third quarter, more proceeds than any quarter since the 4Q99. Most of that capital went to China's e-commerce titan Alibaba (NYSE: BABA), whose record-breaking $22 billion IPO was larger than all other offerings in the 3Q14 combined. Issuance fell below the previous five quarters at 59 IPOs but was still elevated by historical standards. 2014 year-to-date IPO activity remains strong with 206 offerings, the most since 2000 and a 36% increase over last year. Biotechs dominated the deal calendar with 32% of the quarter’s IPOs. Any concerns of froth in the IPO market are tempered by the fact that over half of all IPOs, mostly the biotechs, priced their shares below the proposed range. The total average gain of 21% was slightly lower than recent trends, but still attractive. While an uptick in volatility exiting the 3Q could threaten the IPO market’s current momentum, a packed pipeline of IPOs, helped by a record September for new filings (36), should set the stage for a very active fourth quarter in a record year.

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