U.S. investment bankers are forecasting significant growth in initial public offering (IPO) activity in the year ahead, according to survey results published on Tuesday by accounting BDO USA, LLP.
Investment banking executives project that total IPO proceeds on U.S. exchanges will reach US$46 billion in 2018, up by 30% from 2017, with the number of deals rising by 11%.
“In 2017, the U.S. IPO market bounced back from two consecutive years of dwindling offerings and proceeds raised. Capital markets executives clearly feel that the positive growth of the past year will continue in 2018 as they project significant increases in both the number of IPOs and in total proceeds raised,” says Christopher Tower, partner at BDO.
“Given the strong performance of last year’s offerings, the overall strength of the economy and low volatility in the greater stock market, many factors appear to be in place for increased offering activity in the coming year,” he adds.
By sector, executives surveyed expect more deals in technology, biotech, and healthcare.
According to the survey, bankers view global political and economic instability and inflated private company valuations that will not be supported in public markets as the biggest threats to the IPO pipeline. Private equity and venture capital portfolios are the “most often mentioned” sources of IPOs for the coming year.
While initial coin offerings (ICOs) were increasingly common in 2017, just 19% of executives view ICOs as a future threat to traditional IPOs.