So far, 2016 has been a big bust for the IPO market. Only 38 companies have gone public this year, down more than 50% compared to one year ago, according to Renaissance Capital. After gaining some momentum in May with 15 companies making their public debut, activity in June has tapered off.
On Thursday, PSAWV Inc. postponed its planned initial public offering, which was led by Goldman Sachs and Morgan Stanley, citing unfavorable equity market conditions.
Jackie Kelley, EY IPO leader, told Seana Smith in the video above that it’s no surprise the IPO market is struggling—and she doesn’t see it picking up anytime soon.
“We knew it was going to be a rough year this year,” said Kelley. “We have a lot of headwinds—elections, global macro economic issues, monetary issues—all of this is impacting the IPO market so it’s been a little slow… I think the second half of the year will be pretty choppy. “
But there is a glimmer of hope, and it has to do with big names like Uber, Snapchat and AirBNB. According to EY, 2015 saw more new unicorns (private companies with a valuation of $1 billion or more) than ever before. Yet proceeds from public offerings dropped 24%. Kelley says investors should prepare for some of these “hot technology companies” to go public next year.
“I think many of [the unicorns] are actually just getting to the stage of maturity where they could potentially go public,” said Kelley. “I think we'll see a number of these unicorns actually explore 2017. I think they’ve been looking ahead, knowing this was going to be a tough year, thinking let me go out when the market is solid.”
Five companies are expected to make their public debut next week.
By: Seana Smith (Yahoo).
Photo: Forbes.
Review: Emerging Market Formulations &
Research Unit, FLAGSHIP RECORDS.
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