While mergers and acquisitions grab all the headlines, initial public offerings are on pace to record their best year since the early 2000s.
So far this year there have been 169 IPOs between both the New York Stock Exchange, which claims 68 of those listings, and NASDAQ, which accounts for 101 listings respectively. The NYSE has raised a total of $20.7 billion in capital and proceeds over this year's first two quarters, while the NASDAQ has raised $13.5 billion. Both exchanges are on pace for a record year, blowing away 2013's record of 222 IPOs and logging the best IPO rate since the early 2000s.
The red hot IPO market has been overshadowed, however, by an even redder and hotter M&A market. Comcast-Time Warner Cable, AT&T-DirecTV and other high profile deals have led to a 75% increase in value over the first half of last year to $1.75 trillion.
"This has been our strongest first half of the year since 2000, and of those listings, 60%+ are venture capital-backed deals," said Nelson Griggs, senior vice president of NASDAQ's corporate client group. "They're always going to compare M&A to an IPO route, but that both M&A activity and IPO activity is strong, it just speaks to the growth in the amount of companies that are out there that have both options. The IPOs are doing better than the broader market and we are seeing a very aggressive pace of applications for companies that want to list on NASDAQ. There's every indication that it's going to be a very, very robust second half of the year, as well."
Scott Cutler, executive vice president and head of the NYSE's global listings, also expects a record IPO year, especially in the tech sector, where the exchange has led the NASDAQ over the last two years.
Another factor contributing to the IPO surge has been the passage last summer of the Jumpstart Our Small Business Startups (JOBS) Act, which allows companies to file IPO documents confidentially with the Securities and Exchange Commission, and thus take advantage of strategic timing for their IPO. Twitter, for instance, used this tactic for its IPO on the NYSE last November.
"The big benefit for emerging growth companies is they're able to go thru the process with the SEC in a private way to take advantage of an opportunity in a window when they're ready, and positioning themselves to be able to hit the market in tighter IPO windows," Cutler said. "They've completed that SEC review process and can wait until conditions are perfect. Now you can enter into that process with little risk in terms of the window."