This year has been the best year for launches of U.S. public companies since 2000, according to initial public offering (IPO) tracker Renaissance Capital in a recent report.
A rising stock market, low interest rates and risk-friendly investors have helped propel 222 companies onto major U.S. exchanges like the New York Stock Exchange and the NASDAQ this year. They’ve raised $55 billion In total.
U.S. IPOs were spread evenly throughout the year, unlike in past years, when there have been flurries and droughts of launches. Big U.S. brands like Twitter Inc. (NYSE:TWT) and hotel operator Hilton Worldwide Holdings Inc. (NYSE:HLT) launched late this year. Foreign companies, especially Chinese ones, have also returned to U.S. exchanges.
Health care, tech,and consumer launches produced many of the year’s biggest hits, Renaissance Capital noted. Share performance of newly launched companies beat benchmark indices like the S&P500, said Renaissance, with an average return of 35 percent. The S&P 500 is up 26 percent for the year to date, having hit several all-time highs this year.
The topic of stock market bubbles has returned to market chatter, as some have argued many companies were overvalued just after their IPOs. Twitter is a famous case in point, with some investors skeptical about the social media giant’s ability to turn profits, given its past record, despite its hefty valuation.
Renaissance Capital doesn’t see things this way.
“Though these improvements have raised the question for some of whether 2013 portends an overbought, bubble market, valuations were disciplined,” said the firm in its report.
The previous most active year was 2007, when 214 companies raised $49 billion from U.S. investors. The 2013 high mark represents a 30 percent increase in capital raised from 2012, which saw botched IPOs like Facebook Inc.'s (NASDAQ:FB) May opening.
The year represents a return to the historical norm of 200 offerings per year, said Renaissance.
Renaissance Capital runs the FTSE Renaissance US IPO Index, which measures post-IPO performance. That’s up 61 percent for the year to date, though the index includes IPOs from the past two years.
Notable IPOs to watch in 2014 include a potential $10 billion listing by China’s e-commerce giant Alibaba Group, alongside clothig retailer J.Crew and a spin-off of conglomerate General Electric Corporation’s (NYSE:GE) massive consumer finance arm. Auto giant Chrysler could also list.
Earlier this week, cinema operator AMC Entertainment Holdings Inc. (NYSE:AMC) carried the day with the last IPO of 2013, raising $331 million, reported the Wall Street Journal. Their shares rose 5 percent.