The US IPO market in the 1Q16 hit its lowest levels since the depths of the financial crisis in 2008/2009. Not a single deal priced outside of the health care sector, where eight deals managed to raise $0.7 billion thanks to substantial buying by their existing shareholders. The resulting low tradable float also helped to prop up performance, and IPOs averaged a return of 25%, even as the broader health care sector vastly underperformed major indices. Nine companies hoping to raise a combined $1.4 billion postponed their IPOs due to severe valuation pushback. Despite low filing activity in the first quarter, a large backlog of pre-IPO companies sits in the pipeline. The market's rally and lower volatility during the second half of the quarter is an encouraging sign for IPO issuance, but the real test lies with the IPO icebreakers that launch in the coming months. While these icebreakers may emerge from the long list of growth companies known to be contemplating a money raise, some of the most likely candidates in the active pipeline include national food distributor US Foods, exchange operator Bats Global Markets and Las Vegas REIT MGM Growth Properties. The ultimate pace of the 2016 IPO market remains tough to call at this point, but even in a low-issuance environment we expect a number of important IPOs to launch, which, if past IPO cycles are any guide, should deliver attractive returns to IPO investors.
View our 1Q16 US IPO Review 
