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By Matthew Quinn
Activity in the IPO pipeline reached a two-year high in the fourth quarter of 2009, as 53 companies entered into registration, 30 IPOs launched and the overall pipeline increased to 54 registrants seeking to raise $10.3 billion, according to the Ernst & Young U.S. IPO Pipeline study.
Activity jumped from the previous quarter, which showed some signs of life with 30 new registrants, 14 companies going public and 34 registrants in the pipeline.
Many of the 53 new registrants entering the pipeline in the fourth quarter were smaller companies; 24 companies sought deal sizes of $100 million or less.
"The resurgence of entrepreneurial companies in the pipeline is reminiscent of the pre-recession IPO market," said Maria Pinelli, Americas director, strategic growth markets for E&Y. "Emerging companies should take advantage of the current market to fund their growth strategies."
Because of the small deal sizes, total amount companies are seeking to raise was significantly down from the fourth quarter of 2008 and 2007, when companies sought a total of $15.5 billion and $16.8 billion, respectively.
The technology sector carried the most deals in the pipeline with 11 registrants, representing $1.7 billion, which was almost double the number of deals from the previous quarter. Diversified industrial products accounted for six deals representing $1.5 billion, while pharmaceuticals had nine deals representing $596.6 million. Retail and wholesale continued to raise the most capital over other industries with two deals representing $2.2 billion.
Regionally, the West was most active with 21 companies in registration to raise $3.6 billion. The Southwest sought $2.4 billion, while the Midwest sought $1.2 billion, each with five companies in registration. California had the highest level of activity among the states with 18 companies in registration, followed by Texas and Georgia with three each.
International companies continued to seek to tap the U.S. capital markets, as well. The Netherlands, China, the Cayman Islands and Thailand were all represented in the pipeline. China had four companies in the pipeline seeking a total of $166.3 million.
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