Written by edgaragentsdb on August 30, 2018
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PART FOUR: The ebb-and-flow of proceeds
There was a sharp increase in 2014 to $90 billion in proceeds – part of which was associated with the Alibaba IPO that alone raised $25 billion.
Without the Alibaba IPO, proceeds would be in-line with pre-crisis 2007 level.
Total proceeds per year are directly correlated with the number of IPO companies established per year.
To eliminate the bias and see how well an average company performed, we looked at the average IPO proceeds by company.
There are positive signs for 2018, as the first quarter showed an improvement in average proceeds per company compared to the previous years. Historically, the strongest quarters for IPO activity are the second and third quarter, suggesting proceeds improvement could continue.
Interestingly, while 2008 was one of the worst years for public markets since 2000 both in terms of the number of companies that went public (only 64 new IPOs), and in total proceeds raised (about $30 billion), the average proceeds were more than $500 million. The reason behind this peak was Visa’s IPO that, despite the financial crisis, went public and raised almost $18 billion. Without Visa, the average proceeds would be $235 million, in line with the 2007 level of $235 million.