Hoover’s IPO Scorecard: Q4 2011 and year-end recap

IPO activity in 2011 started off strong in the US capital markets but fizzled out mid-year mostly due to the European debt crisis. According to Hoover’s IPO Scorecard, 116 companies went public last year, raising a total of $33.4 billion. That’s down 14% from 2010, when 153 companies went public and collectively raised $38.7 billion.

The first half of the year saw strong results — 28 companies raised $12 billion in Q1 and 44 companies raised $11.9 billion in Q2. As the debt crisis worsened in Europe, IPO activity in the US dwindled down to $3.1 billion in Q3, making it the worst quarter since Q2 of 2009, which raised a mere $1.6 billion.

In Q4 of 2011 alone, 26 companies went public on major US stock exchanges, raising $6.4 billion. (That’s a sliver of activity compared to the last quarter of 2010, when 57 companies went public and raised $24.3 billion.) There were, however, some highly anticipated IPOs for Internet companies in Q4, notably Groupon and Zynga. Social gamer Zynga was the period’s only billion-dollar IPO, raising $1 billion on the nose. (Groupon walked away with $600 million). The only other high-dollar IPO for Q4 was fashion design house Michael Kors, which set up shop in Hong Kong and raised $944 million. Michael Kors also had the second-best first day gain for the quarter, with a return rate of 36%.

Still, those billion-dollar IPOs couldn’t redeem the entire year. Altogether, there were six IPOs that raised at least $1 billion in 2011 (Arcos Dorados, HCA Holdings, Kinder Morgan, Nielsen Holdings, Yandex, and Zynga), up from just one in 2010 (General Motors). Those six IPOs combined raised $11.4 billion, while General Motors’ was valued at $15.7 billion. Of the six, only three (HCA Holdings, Kinder Morgan, and Zynga) are headquartered in the US.

Back to Q4, where one industry prevailed — energy. Eight of the 26 companies (or 30%) that priced last quarter are oil and gas concerns. However, only one — Sanchez Energy — raised more than they initially sought. (Unfortunately, Sanchez Energy posted the third-worst first day drop in trading for the quarter, for a 22% loss.) The other five — Bonanza Creek Energy, Inergy Midstream, Laredo Petroleum Holdings, LRR Energy, Memorial Production Partners, Mid-Con Energy Partners, and Rose Rock Midstream — all apparently overestimated the value of their IPO.

Findings from Hoover’s IPO Scorecard for Q4 2011:

• Best First-Day Gain: (Imperva, Inc.) 93%
• Worst First-Day Drop: (Digital Domain Media Group) — 28%

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