NEW YORK: Two-thirds of US transaction attorneys believe the IPO market will be flat in 2013 compared to 2012, according to a survey by KCSA Strategic Communications.
The attorneys predicted a flat IPO market because of continued economic uncertainty, including the so-called US fiscal cliff, instability in the Eurozone, and decreased consumer confidence.
Meanwhile, 35% of respondents said they believe the IPO market next year will be stronger than in 2012. More than half of those attorneys said resolution of the fiscal cliff would drive improvement of the IPO market, while 12% said an end to the Eurozone crisis would strengthen it.
“There's a lot of money waiting to be spent, but people don't want to do it in a time when there's a fear that we could go back into a recession,” said KCSA Strategic Communications CEO Jeff Corbin.
Sixty-six percent of respondents said the social media bubble has burst, due partly to Facebook's troubled IPO. That debacle will cause social media company valuations to be lower in 2013, according to 89% of attorneys surveyed. So far there are no social media companies in the IPO pipeline for 2013, Corbin added.
“Facebook totally took all the air and deflated the bubble,” he said. “That's probably a good thing, because other companies trying to just ride on the coattails of the social media wave were stopped in their tracks.”
The technology industry will result in the most IPOs next year, according to 41% of attorneys surveyed. Twenty-four percent predicted that the energy sector would see the most public offerings, while 8% believed it would be healthcare.
A majority of respondents opined the number of private-equity backed offerings would be greater than in 2012, which saw the highest number of private-equity backed IPOs since 2007.
With an expected high demand for foreign companies accessing US capital markets, 38% of attorneys said China will have the most IPOs on US exchanges. This was a decrease from the previous two years, when 58% of survey respondents in 2012 said China would provide the most issuances, while 100% named China in 2011. Attorneys attributed the declining confidence in Chinese IPOs to questions about the country's accounting practices and transparency issues.
Seventeen percent of respondents said Israel would be the foreign region with the most issuances on US exchanges, while 12% said it would be the European Union and 10% predicted the United Kingdom.
KCSA's third-annual IPO Survey interviewed 50 securities attorneys whose firms advised on 87% of IPOs listed on major US exchanges during 2012.