Overview
With 80 initial public offerings taking place in US markets in the last quarter of the year, 2014 ended with a bang, up 27% from the 63 IPOs in Q3. That brings the year-to-date total to 309, a nice bump up of about 20% compared to the 258 IPOs in 2013.
In total, over $17 billion was raised in Q4. This is much less than the nearly $37 billion raised in Q3, but that incredible amount was due largely to the record-breaking Alibaba (BABA) offering, which raised $25 billion. Excluding BABA, the 80 IPOs in Q4 raked in about 42% more than the 63 IPOs in Q3.
Notable IPOs in Q4 include Virgin America (VA), which raised $307 million; LendingClub (LC), which raised an initial $866 million before the underwriters exercised options that brought the total to over $1 billion; Wayfair (W), which raised about $319 million; and VWR Corp (VWR), which raised over $530 million before underwriter options.
All told, the 309 IPOs in 2014 raised almost $90 billion, a healthy increase compared to the approximately $66 billion raised in 2013.
Industry Analysis
IPO industry trends remain consistent with broader trends across the U.S. economy. Pharmaceutical, medical, and biotech companies accounted for about 28% of all IPOs in the quarter, and raised about $2 billion.
Auditor Market Share
As usual, the Big Four dominated the market for audit services provided to newly public companies. In Q4, the Big Four represented about 76% of IPO companies.
Auditor market share for 80 #IPOs in Q4 2014: EY (30%), Deloitte (19%), KPMG (14%), PwC (14%), Marcum (5%), others (18%).
— Audit Analytics (@AuditAnalytics) February 9, 2015
After slipping to second briefly in Q2, EY regained its place in Q3 and now has retained first in Q4. Marcum LLP, the Melville, New York based national firm, had an impressive quarter, acting as auditor for four new companies.
Auditor market share for 309 #IPOs in 2014 YTD: EY (27%), PwC (18%), Deloitte (17%), KPMG (14%), BDO (4%), Grant (3%), others (17%). — Audit Analytics (@AuditAnalytics) February 9, 2015
For the year, EY led with 27%, followed by PwC, Deloitte, and KPMG. BDO and Grant Thornton round out the Global Six firms, which together have a market share topping 83%.
Emerging Growth Companies
66 of the 80 IPO companies, or 83%, elected to register as Emerging Growth Companies. That’s a slight increase over Q3, when about 80% of IPO companies registered as EGCs.
Interestingly, 6 of KPMG’s 11 IPOs were not EGCs, making it the only auditor engaged by a majority of non-EGC companies. Compare that to Ernst & Young, which audited 21 EGCs compared to only 3 non-EGCs.
All in all, it has been a strong year for IPOs. Activity in 2014 is the highest it’s been since before the last market crash, and regulatory changes such as the Emerging Growth Companies designation appear to be facilitating the raising of new capital.