Pacific Northwest companies raised nearly twice as much in initial public offerings (IPOs) in 2006 as 2005. Four companies based in the Seattle area and one in the Idaho panhandle raised a total of about $450 million via IPOs in 2006. In 2005, only three Pacific Northwest companies hit the IPO market, raising about $240 million.
Regionally, the big IPO year recently was 2004, when nine Pacific Northwest companies went the IPO route, raising a total of about $533 million.
Nationally, 2006 represented a recovery year for the IPO market in capital raised. Renaissance Capital’s IPOhome.com reports that 197 IPOs raised $43 billion last year. In 2005, 193 IPOs raised $34 billion.
Both years look tepid in comparison with the bubble years, roughly 1997 through spring 2000, when underwriters took companies public on not much more than a business plan and a website.
In 1999, underwriters churned out 486 IPOs, raising $93 billion. In 2000, even though everyone could hear the air wheezing out of the bubble, investment bankers still raised a record $97 billion for 406 companies. From 2001 through 2003, an average of only 70 IPOs a year hit the market.
But the IPO market has been in recovery since 2004, partly because buyers of IPOs have been doing well. Renaissance Capital calculates that 2006’s IPOs returned an average of 26%, about half from the first-day “pop.” IPO returns beat major market indices for the sixth straight year.
The health-care sector, including medical devices and biotechnology, accounted for the biggest share of 2006 IPOs. Other popular sectors in 2006 included energy and venture-backed technology.
— Excerpted from Marple’s Pacific Northwest Letter, editor Michael Parks. For information on this biweekly report on Northwest economic trends, visit www.marples.com.