IPO Market Begins to Heat Up

The initial public offering market is beginning to warm from recession lows, and with big name deals such as General Motors and Toys "R" Us looming on the horizon large IPOs appear to be gaining momentum. According to analytical firm Dealogic, 2010 year to date has brought $138.74 billion in priced initial public offerings globally, well above the $114.8 billion and $102.1 billion the IPO market priced for the entire years of 2009 and 2008, respectively. While far away from the $271.8 billion priced IPOs in 2006 and $323.95 billion in 2007, this year appears to be on pace to be as strong of a year in priced offerings since 2005. But the past two years were plagued by the recession and financial crisis, giving 2010 a low hurtle to jump. “The IPO market was brought to nearly a standstill in 2008 and 2009,” said Nick Einhorn, an analyst with the firm Renaissance Capital, which focuses on the IPO market. Globally, the sector leading IPOs this year remains finance with $31.7 billion in priced offerings, a figure that’s not very surprising since it includes last month’s deal for Agricultural Bank of China. The big Chinese bank listed its shares on the Shanghai and Hong Kong exchanges and raised $22.1 billion in capital, making it the largest IPO in financial history. The other top sectors for 2010 so far have been insurance with $19.55 billion in offerings; technology with $15.36 billion; and oil and gas with $7.6 billion, according to Dealogic. Einhorn said 2010’s IPO volume has been driven primarily by private-equity firms trying to raise fresh capital by spinning off their holdings, combined with company executives trying to take advantage of improving market conditions. “The private-equity backed companies currently have a lot of leverage on the balance sheet and are using IPOS to rebalance and return some capital to their shareholders,” he said. Toys “R” Us will be one of the more notable IPOs to come from the private-equity world when it prices later this year. Private-equity backed Dollar General DG went public late last year, raising $720 million. Several major deals are expected to add to the $140 billion already raised in IPOs this year, most notably General Motors. GM formally filed for its IPO last week and is expected to price its offering this year, and American International Group AIG division AIA is expected also to be spun off this year. GM and AIA are expected to be the biggest U.S. deals by offering size, but other names that have priced or will price an IPO this year include Tesla Motors TSLA, and Skype, and the media Web site Hulu is reportedly in discussions to sell shares to the public. To read the rest, head over to FOX Business.