Overall, the number of U.S. IPOs in the second quarter of 2012 declined to 27, from 44 in the first quarter.  The second quarter started strongly with 17 IPOs pricing in April, and 10 IPOs pricing in May, but IPO activity stalled due to ongoing global macroeconomic concerns that have increased investor uncertainty and market volatility.  Consequently, no pricings have been completed in the U.S. since the Facebook IPO in mid-May.

Despite a slowdown in IPO pricings, the registration pipeline remains at high levels and there is optimism that pricing activity will return as some of these concerns are resolved, according to IPO Watch a quarterly and annual survey of IPOs listed on U.S. stock exchanges by PwC.

Year-to-date, 71 companies have completed IPOs raising total proceeds of $26.9 billion, compared with 85 companies that completed IPOs in the first half of 2011 raising $25.8 billion.  The slowdown in pricings in June led to a 39 percent decrease in volume compared with the first quarter of 2012, and a 48 percent decrease compared to volume in the second quarter of 2011.  Including the $16 billion in proceeds from the Facebook IPO, total IPO proceeds raised in the second quarter of 2012 amounted to $21.2 billion, 66 percent higher than the comparable period in 2011 and the third highest quarterly proceeds since 2007.

“The IPO market entered the second quarter with considerable momentum and with confidence levels supported by the high registration pipeline,” said Henri Leveque, leader of PwC’s U.S. Capital Markets and Accounting Advisory Services.  “However, pricing activity proved unsustainable as volatility increased along with renewed concerns over global uncertainty and other market dynamics. That said, as the markets are seeing increasingly compressed IPO windows of opportunity, our clients are now more than ever focused on readying themselves to be able to execute deals when, and not if, the windows re-open."

Excluding Facebook, second quarter IPOs raised total proceeds of $5.2 billion, at an average value of $200 million per IPO, representing an increase of 53 percent over the first quarter average IPO size of $131 million.  Total proceeds, excluding Facebook, were only 10 percent less than the first quarter of 2012, illustrating the strength of the IPO markets earlier in the quarter.  Continuing on the positive IPO pricing trends of the first quarter, IPOs in the second quarter produced an un-weighted average return of 8 percent since IPO date, which again exceeded the S&P500 quarterly loss of 6 percent.

“The solid registration pipeline remains a positive forw ard-looking indicator for the IPO market in 2012 and beyond given that historically the majority of companies that file will ultimately price their IPOs,” added Leveque.  “In addition, actual registrations may be higher than reported given the impact of the JOBS Act, which allows emerging growth companies to file confidentially with the SEC with the requirement that they publicly disclose their filings within 21 days of their anticipated IPO road shows.  There is a lot of interest around this new piece of legislation and while it’s too soon to predict its ultimate impact, we expect a number of companies to explore this new avenue as a vehicle to go public.”

Financial sponsors continued their history of strong presence in U.S. IPOs, backing 70 percent of IPOs in the second quarter of 2012 and generating 90 percent of total proceeds.  This high level of sponsor involvement remains consistent with the comparable quarter in 2011 which also saw two-thirds of the quarter’s IPOs backed by financial sponsors, representing 74 percent of proceeds.

Global market activity overall declined in the second quarter.  In Europe, after some early encouraging signs in the first quarter, IPO activity slowed dramatically in Q2 2012 with a 65 percent decline in volume and a 96 percent decline in proceeds from Q2 2011. Similarly, Asia showed a 40 percent decline in listing volume and a 76 percent decline in proceeds from the second quarter last year.