Texas investors may have heard that the initial public offering market is suffering the effects of "deal fatigue," brought on by a flurry of new offerings across the world's major markets. Investors may be growing more selective, according to one observer, but the window could merely be narrowing, not going shut.
Worldwide, the IPO market is off to a tremendous start in 2014; the first quarter of the year saw 239 deals go through, representing a 47 percent increase year-over-year versus 2013. The first quarter of 2014 was the best quarter since 2011 for IPOs. London markets raised $4.6 billion and Hong Kong raised $5 billion. New York led the way though, with 25 deals worth $8.6 billion.
Investors seem to be favoring more established companies over midcap or new entrants into the market, or it could be that the market is just coming of the boil a bit after peaking in March. Among the companies that suffered from changing investor tastes were Saga, an insurance provider that set its offering share price near the bottom of the range, and Candy Crush game-developer King Digital, which did not perform up to the hype at its debut.
Despite the rumored deal fatigue, companies continue to bring IPOs. On May 27, Lloyds Banking Group announced it would offer 25 percent of retail arm TSB Bank. Additionally, three other companies, retailer B&M, budget airline Wizz Air and property website Zoopla recently announced IPO plans. Small- to mid-size companies may be able to efficiently raise capital through private placements and IPOs, but companies must be aware of the restrictions placed on such offerings by U.S. securities law. A business attorney may be able to advise organizations considering a move to raise capital through a private placement or an IPO.
Source: CNBC, "Are IPO investors getting âdeal fatigueâ?", Arjun Kharpal, May 27, 2014