As every reader of this article knows, the private equity and venture capital industries are largely affected by business cycles and the associated sentiments. What does Pitchbook’s recently released private equity and venture capital IPO sentiment survey tell us? Here are participants’ answers to the six questions of the market conditions survey.
IPO Filings, Pricings, and Dual-Class Share Offerings – 2013 Compared to 2012
Overall, in general one could classify the sentiment towards the number of IPO filings for the coming year as optimistic, with almost 80 percent of participants seeing the number of IPO filings increasing, and about 35 percent thinking IPO volume will increase greater than 10 percent. On views towards IPO pricings, one could classify sentiments as cautiously optimistic, with about 65 percent of respondents seeing positive growth, although only about 20 percent see a strong year with greater than 10 percent growth. Participants were much less optimistic on dual-class share offerings, with about 60 percent thinking 2013 will be about the same as 2012.
Affect of the JOBS Act on Future IPOs
On the government policy question dealing with the JOBS Act, respondents appear to be mildly optimistic, with 47 percent thinking the Act will lead to some positive increases in IPO activity, although 42 percent think the JOBS Act will make no difference. The mildly optimistic views might be the result of international competition for the small investor business (crowfunding) or it could simply be due to insiders’ view that the deals would have happened regardless of Washington’s actions.
Tailwinds for U.S. IPO Market in 2013
Two responses appear to be the largest tailwind contributors: strong stock market performance and improved economic conditions. These two sentiments are fickle though, especially given the all-time highs of the current equity market conditions.
Foreseen Headwinds for the 2013 U.S. IPO
On the whole, uncertainty regarding U.S. regulation and taxation dominates the headwinds concern with more the 90 percent of respondents indicating this as a top concern. Other headwind concerns include new macroeconomic headwinds and more delays in implementing the JOBS Act.
Most/Least Attractive Industries for IPO Market in 2013
Participants gave three industries the nod as being the most attractive for 2013, with IT leading the way at around 25 percent, followed by Energy at a little over 20 percent, and Business to Business deals at about 15 percent.
On the opposite end, Financial Services is considered the least attractive industry, with 25 percent of respondents giving indicating the lack of attractiveness of the industry. Financial Services is followed by Materials and Resources at around 20 percent and Business to Consumer at just under 20 percent.
Average Age of Newly Listed Companies in 2013
Interestingly, 56 percent of respondents think the average age of newly listed companies will drop below the 10 year threshold, with 40 percent thinking the average age will be in the 10 to 15 year range. According to Renaissance Capital, should the average age drop below 10 years, it would be the first time on record.
Factoring in all of the responses to Pitchbook’s survey, overall private equity and venture capital professionals appear to be fairly upbeat about IPO market conditions for the remaining of 2013.
Comments on this entry are closed.