2016 On Pace To See Fewest IPOs Since 2009 & Smallest IPO Raises Since 2008
As many in the microcap community know, it’s been a slow year for IPOs.
In the first three quarters of this year, just $7.24 billion was raised across 49 public offerings. While September was good month for IPOs, it wasn’t good enough to turn things around for 2016. With the traditionally slow holiday months remaining for 2016 and the recent presidential election, 2016 is likely to be the worst year for IPOs since 2009.
Another negative for 2016 IPOs is that, for the first time since 2008, not a single IPO raised more than $250 million for the issuer.
In an interview with TechCrunch, Lise Buyer of Class V Group attributes smaller raises to low valuationsdriving companies to take advantage of the demand created from limited supply. Instead of selling 10-20% of their shares in an IPO, issuers are opting to sell smaller percentages of their company and follow IPOs up with larger secondaries. This helps issuers limit supply to drive up demand during an IPO and prove their value to the public markets before raising additional capital at a higher valuation.
For additional reading on the subject, check out “IPO pro Lise Buyer on what you need to IPO in the next six months” from TechCrunch HERE.