IPOs Hit 14-Year High in 2014

IPO ETF manager Renaissance Capital reported that the average return this year was 16%, close to the 10-year mean, but well short of 2013’s average return of 41%. Some 40% of 2014 IPOs priced below the expected range.

These were the top 10 IPOs by deal size and return:

1. Alibaba, $22 billion, 60.3%
2. Citizens Financial Group Inc. (NYSE: CFG), $3.01 billion, 14.2%
3. Synchrony Financial (NYSE: SYF), $2.875 billion, 25.7%
4. Ally Financial Inc. (NYSE: ALLY), $2.375 billion, -11.4%
5. Paramount Group Inc. (NYSE: PGRE), $2.293 billion, 4.7%
6. Santander Consumer USA Holdings Inc. (NYSE: SC), $1.8 billion, -22.8%
7. JD.com Inc. (NASDAQ: JD), $1.78 billion, 23.7%
8. IMS Health Holdings Inc. (NYSE: IMS), $1.3 billion, 26.5%
9. Markit Ltd. (NASDAQ: MRKT), $1.283 billion, 4%
10. Grupo Aval Acciones y Valores S.A. (NYSE: AVAL), $1.1 billion, -25.3%

There were 100 health care IPOs launched in 2014 that raised a total of $8.7 billion. Technology companies posted the second largest share with 55 IPOs for a total value of $32.3 billion (including Alibaba of course), and there were 36 financial IPOs that raised a total of $18.6 billion.

The poorest performing IPO sectors for the year were utilities, where one IPO posted a negative 13% return and energy where 30 IPOs posted an average negative 13% return. The 100 health care IPOs posted an average return of 31.7%, driven by biotech companies. Tech companies produced an average return of 55% in 2013, but that dropped to 14% in 2014.

Looking ahead, Renaissance Capital noted that 347 companies made initial IPO filings in 2014, up 36% year-over-year, and that the current pipeline includes 107 companies seeking to raise $19.3 billion. The IPO ETF management firm also said that its watch list has increased to 255 companies, of which some 80% are tech companies, including familiar names like Uber, Airbnb, Spotify and Dropbox.

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