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Economic snapshot: Bigger deals dominating U.S. IPO market

Economic snapshot: Bigger deals dominating U.S. IPO market

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While the number of deals is down, proceeds are up. The average IPO return is hovering around 14 percent from its offer price.

While the number of deals is down, proceeds are up. The average IPO return is hovering around 14 percent from its offer price.

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Published by: The Dallas Morning News on May 13, 2013
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05/13/2013

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LOCAL ECONOMIC SNAPSHOT | IPOS

Bigger deals dominating U.S. market
By HANAH CHO
Staff Writer hcho@dallasnews.com

By TOM SETZER
Staff Artist tsetzer@dallasnews.com

After stepping away during the financial crisis, investors are putting their money back into public equity offerings. The U.S. IPO market is having a solid start in 2013. While the number of deals is down from a year ago as of May, proceeds are up. The average IPO return is hovering around 14 percent from its offer price.

Historic IPO activity in the U.S.
The number of deals and proceeds have been inching up in recent years. Last year saw one of the largest IPOs in Facebook, at $16 billion.
Number of IPOs 250 200 150 100 50 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
2013 data is as of Friday

IPO proceeds in billions of dollars $50 $40 $30 $20 $10 0

Nationwide IPO industry breakdown
The best-performing IPO sector is capital goods and services, which includes home builders, reflecting the housing market recovery.
Capital goods, services Consumer goods, services Business services Energy Health care

48.7% (average total return, year to date)

38.8%

33.8%

13.9%

13.5%

Number of deals: 4 Proceeds in billions: $1.2 Transportation

Number of deals: 4 Proceeds in billions: $1.9 Materials

Number of deals: 2 Proceeds in billions: $0.6 Communications

Number of deals: 4 Proceeds in billions: $1 Financial

Number of deals: 12 Proceeds in billions: $3.8 Technology

11.5%
Number of deals: 1 Proceeds in billions: $0.2

9.7%
Number of deals: 2 Proceeds in billions: $0.5

8.3%
Number of deals: 1 Proceeds in billions: $0.3

7.8% -1.3%
Number of deals: 21 Proceeds in billions: $4.7 Number of deals: 6 Proceeds in billions: $0.5

Texas IPO activity
Energy and oil-related companies dominated the IPO market last year. Texas-based restaurant and financial services firms also went public.
(In chronological order) Volume in millions IPOs in 2012 of dollars Total number: 24 Total proceeds: $6.9 billion Matador Resources $160 GSE Holding $63 Bazaarvoice $114 Nationstar Mortgage Holdings $233 Whiting USA Trust II $320 MRC Global $477 Forum Energy Technologies $379 SandRidge Mississippian Trust II $546

Midstates Petroleum Co. $312 Pacific Coast Oil Trust $370 PetroLogistics LP $595 Ignite Restaurant Group $81 Chuy’s Holdings $76 Del Frisco’s Restaurant Group $75 AmREIT $51 Hi-Crush Partners LP $191 Susser Petroleum Partners LP $195 Summit Midstream Partners LP $250 Linn Co. $1,104 Diamondback Energy $219

WhiteWave Foods Southcross Energy Partners LP Alon USA Partners LP Western Gas Equity Partners LP IPOs In 2013 (through Friday) Total number: 5 Total proceeds: $1.3 billion USA Compression Partners LP CVR Refining LP CyrusOne Independent Bank Group Emerge Energy Services LP

$391 $180 $160 $378

$198 $600 $314 $83 $128

SOURCES: Renaissance Capital; Dallas Morning News research

The bottom line
“It looks like we’re on track to have a strong year in 2013, likely better than 2012. There are larger IPOs getting done and not as many small ones and not as many venture-backed ones. I think they are more inclined to feel that a larger, established company is safer than the high-growth, venture-backed companies.” Kathleen S. Smith, principal at Renaissance Capital “There are lot of positive data points: decline in unemployment, GDP picking up, production picking up and an improving banking sector. People are getting confident. In economies like Texas and Dallas, relative to other places, people have a lot of excitement about putting money into IPOs.” Dory Wiley, president and chief executive of Commerce Street Holdings in Dallas “Nationwide, the financial industry has had the most IPOs so far this year. We could see more banks and financial services firms consider going public, given the recovery in that sector.”

Hanah Cho, staff writer, The Dallas Morning News

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