Global IPOs Reach Record High In 2017

Global initial public offerings (IPOs) over the past year saw the highest number of listings since the financial crisis, driven by strong activity in the U.S. and a record number of Chinese issuances.

Citing data from technology company Dealogic, the Financial Times reported nearly 1,700 companies went public this year, up 44 percent from last year and representing the highest number of IPOs since 2007. The total amount of money the startups raised also increased, up 44 percent year-over-year to $196 billion. The figure marks the largest total IPO amount since 2014.

Startup companies based in the U.S. were able to raise $49 billion in 2017, double what they brought in during 2016. Last year was the worst for the IPO market in longer than ten years. Meanwhile, the number of IPOs in Europe jumped 40 percent this year, and China similarly saw a record number of companies go public. China drove the global IPO count higher with greater than 400 companies launching IPOs in China’s markets.  

By comparison, Chinese startup eCommerce company Alibaba went public in 2014 and raised $25 billion on its own, which led to the largest amount raised that year.

In addition to the strong showing seen by the U.S. on the IPO front, the returns from the investments were stellar enough to expect more of the same in 2018. The average return from an IPO this year was 23 percent, which is not much higher than the S&P 500 Index — a figure which is up 20 percent so far this year.  

Social media company Snap, the maker of the disappearing messaging app Snapchat, represents one example of an IPO that underperformed in 2017. A stock priced at $17 a share, a lack of user growth and an increased revenue from advertising spend has tanked the stock, resulting in trading well below its IPO price for most of its public life. Other European IPOs also underperformed toward the end of the year, giving investors lackluster returns.