Will 2017 Bring a Surge of IPOs?

April 07, 2017

Snapchat (SNAP) — which went public in early March — was the first venture-backed technology company to do so in 2017. The firm sold 200 million shares to raise approximately $3.4 billion, making it the largest tech IPO after Alibaba Group in 2014. As private companies like Uber, Airbnb, and Pinterest continue to use private markets to raise capital, how much longer can they wait before turning to the public markets?

This week’s chart shows total global IPOs going back to 2008. Compared to 2015, 2016 saw 32% fewer global companies entering public markets. As accelerated growth continues among private companies, many market participants expect lower corporate taxes and fewer regulations. These potential changes would likely lead to more IPOs in 2017. According to Renaissance Capital, U.S. IPOs were off to a solid start in the first quarter with 25 companies going public and raising $10 billion. If in fact IPOs do pick up globally in 2017, it will become a much stronger year for venture and private equity investment firms. These firms will be able to monetize investments following the IPOs, creating a financial windfall for investors. A broad market sell-off in 2017 could be the only thing standing in the way of a record setting year for IPOs.

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The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

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