Wall Street sees 2014 as best year for IPOs

Wall Street in 2014 enjoyed its best year for initial public offerings since 2000, thanks to the record-setting flotation of Chinese Internet giant Alibaba and a barrage of biotech deals.

Activity was “uninterrupted” and proved largely immune to forces that at times rattled equity markets, Renaissance Capital said in a report.

While various global events, such as conflicts in the Middle East, caused nervousness in global markets, they largely failed to disrupt the US IPO applecart, Renaissance said.

Renaissance said there were 273 stock debuts this year, up 23 percent from last year.

Dealogic released similar numbers, counting 291 offerings, up 27 percent from last year.

Analysts are gearing up for another heady year in 2015, citing a deep pipeline of securities filings from leading prospects and investor zeal for hot names such as apartment rental website Airbnb and app-based taxi service Uber.

New entrants to US equity markets raised US$85 billion in 2014, according to Renaissance, about 55 percent more than in 2013.

“What is behind the growth is that companies are really growing and need more capital to continue to accelerate their growth,” Bob Greifeld, Nasdaq chief executive, said on CNBC. “That is great for the overall economy.”

The year 2000 remains the best on record for IPOs, with 406 offerings raising US$96 billion, Renaissance noted.

Paradoxically, while the US and China spar for the distinction of the world’s biggest economy, Alibaba emerged as a key player behind New York’s banner year. Alibaba in September became the biggest IPO in history, raising US$22 billion.

Besides Alibaba, nine other companies raised more than US$1 billion in 2014. They included Citizens Financial, a unit of UK’s Royal Bank of Scotland, with US$3 billion gained, and Synchrony Financial, which was spun out of General Electric, with US$2.9 billion.

A big chunk of this year’s IPOs came out of the health sector, with biotechs comprising 25 percent of total deal volume at 69 offerings, according to Renaissance.

Biotech offerings also accounted for eight of the top-10 IPOs in terms of return to shareholders. However, the health sector also was responsible for five of the 10 worst-performing new stocks.

In all, the average new stock finished 16 percent higher at the end of the year compared with its IPO price. That was well below the 40.8 percent gain in 2013.

Renaissance cited the sell-off in energy IPOs in the latter part of the year as oil prices tanked, as well as a correction in high-multiple tech stocks in March and April, for the year-on-year decline.

Twice as many deals were postponed in 2014 compared with the prior year and 40 percent came to market below the proposed pricing range, the report said.