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Q3 2017 IPOs: Auditor Market Share and More

Overview

There were 44 initial public offerings in U.S. markets between July 1, 2017, and September 30, 2017,  a decrease of 31% from last quarter. Third quarter IPOs raised $7.4 billion, approximately half of what was raised in Q2.

All told, there have been 140 U.S. IPOs in the first three quarters of 2017, which raised over $34 billion. For comparison, the same period in 2016 had 95 IPOs that raised $16 billion, and 157 IPOs that raised $29 billion in the same period in 2015.

Industry Analysis

USCF Funds Trust (NAICS 523920), a portfolio management company, brought in $750 million, the most for the quarter.

Social Capital Hedosophia Holdings Corp. (NAICS 999999), a blank check company, brought in $600 million, the second highest amount for the quarter. In an interview with Fortune, CEO of Social Capital Hedosophia, Chamath Palihapitiya, said the company was created by the merging of two investment firms, Social Capital and Hedosophia, with the intent to acquire another tech company and speed up the IPO process.

Interestingly, the top two IPO earners for this quarter did not belong to either a pharma or tech sector, industries that are typically associated with strong IPO activity.

Auditor Market Share

The Big Four audited 52% of the U.S. IPO market.

As seen in the table below, Deloitte had 8 IPO audit clients, the most for all firms this quarter. Deloitte’s clients also raised the highest amount among the Big Four firms, raising over $1.4 billion.

Among non Big Four firms, Marcum’s audit clients (one of them being Social Capital Hedosophia Holdings Corp) raised the most overall this quarter, bringing in $1.96 billion. This pushes Marcum into the top 6 of amount raised by auditor for the year.

Emerging Growth Companies

40 of the 44 companies, or 91% elected to register as emerging growth companies (“EGCs”) this quarter, which is the same as the amount of companies that elected to register as EGCs in Q3 last year, and a slight increase from the 88% last quarter.

Conclusion

Although there was a decline in IPOs this quarter compared to last quarter, there is still an upward trend compared to this period last year. There are 45 more IPOs, which have raised more than $18 billion compared to the first three quarters of 2016.

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