Capital markets executives are divided on the question of whether there will be more initial public offerings on U.S. exchanges next year, according to a new study by BDO USA.
While 37 percent of the investment bankers surveyed by BDO predict an increase in the number of U.S. IPOs in 2016, only 4 percent believe it will be a substantial jump. Nearly the same proportion (36 percent) forecast activity will be flat compared to 2015. Just over a quarter (27 percent) expect a decrease in offerings on domestic exchanges.
Overall, the bankers surveyed by BDO predict the number of U.S. IPOs in 2016 will be about the same as 2015 (+ 0.15%). However, they anticipate these offerings will average $219 million in size, which projects to $37 billion in total IPO proceeds on U.S. exchanges, an increase of 23 percent from 2015.
IPO activity on U.S. exchanges has declined significantly in 2015, BDO noted. Capital markets executives were split on the reason for the decrease in offerings. When asked to identify the primary reason behind the drop in IPOs, bankers cited poor IPO performance discouraging other potential offerings (29 percent), uncertainty surrounding the potential interest rate hike by the Federal Reserve (21 percent) and the surge in M&A activity causing many IPO candidates to opt for a sale over the risk of an offering (21 percent). Smaller proportions mentioned a slowing US economy (16 percent) and the lack of offerings from traditionally strong technology and energy sectors (11 percent).