Market volatility causes IPO market to stall out
New York, January 1
The volatile trading that defined 2015 led to a very choppy market for companies wanting to go public.
The number of US companies that successfully made an initial public offering (IPO) of stock in 2015 dropped by more
than 40 per cent compared with 2014, according to a report by IPO research firm Renaissance Capital.
The amount raised was considerably less as well, falling to $30 billion in 2015 from $85.3 billion. The drop-off was the result of significantly reduced ambitions from companies as they hit the market, as well as wariness of investors rattled by sharp swings on Wall Street, particularly in the second half of the year.
The August downturn and a US market correction in September convinced a lot of companies to put their plans to go public on hold, Renaissance Capital said.
“For the first eight months of the year, the IPO market was on target to reach over 200 IPOs with solid returns, but went into a tailspin in August and September that wiped out positive performance, drove abnormally high IPO discounts and brought issuance to a near halt by year-end,” the firm said in its report.
IPO activity stalled not only in the US, but around the world. The amount of money raised in IPOs globally was $156.2 billion, down 35 per cent from a year earlier. Asia was still a significant driver, even with the problems in the Chinese stock market.