JPMorgan’s head of global equity capital markets, Liz Myers, can name a bunch of reasons 2017 could see a strong rebound in initial-public-offering activity around the world.
Myers, whose team topped league tables for equity capital markets revenue in 2016 as well as IPO volume share in 2016 and year-to-date, did just that in an interview with Business Insider earlier this month.
“We’re seeing quite a sentiment reversal in the IPO market this year, particularly in the US, where January marked the best start to the year since 2014,” Myers said.
While 2016 saw fewer than 100 IPOs in the US, she said a typical year would see as many as twice that number. She expects to see a more active market in 2017.
“Both issuers and investors are approaching the market more constructively this year,” she said.
“Combined with a pro-growth backdrop, we expect to see a notable increase in IPO volumes this year.”
Twelve deals have priced in the US in 2017.
Myers walked through numerous sectors, from industrials to financials to tech, and laid out her expectations. She also said we could expect to see more cross-border activity this year, with foreign companies choosing to list in the US.
Here is what’s on Myers’ mind.
A strong start
Of the companies that did go public in 2016, more than 70% are trading up right now, Myers said. That’s up from 52% around this time last year.
“This aftermarket momentum reinforces positive investor sentiment toward the 2017 IPO class,” she said. “Follow-on offerings also tend to increase in number and size when valuations trend positively post-IPO.”
For private-equity or venture-capitalist backers, that offers the chance to sell down their stakes.
Also, of the nine deals that priced last month, two priced above their ranges and two priced at the top of their ranges. There were no IPOs in January of last year to compare with, but two of the six IPOs to price in the whole first quarter of 2016 were below range, Myers said.
Healthcare, industrials, and tech
Though only nine deals priced in January, the breadth of sectors they fell under was a positive sign, Myers said. Those include energy, industrials, healthcare, and special acquisition companies, or Spacs.
Industrials are seeing a tailwind as markets anticipate accelerated growth and infrastructure stimulus spending, she said. Exploration-and-production companies in particular are seeing enthusiasm, especially oil-field services companies. That’s because, as oil prices rise, exploration-and-production companies begin to drill again, which means revenues start to increase because they once again have customers.
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(Several oil-field services companies are making the most of the rotation out of other industries and into energy by filing under a special Securities and Exchange Commission rule, 144A, which is an exemption from the typical SEC registration requirements that allows companies to sell shares more quickly.)
In technology, Myers said she expected…