Previously we discussed the health of the IPO market as it relates to the number of deals, proceeds, and performance. Today we dig a little deeper and breakdown the stats by industry sector to see which sector is lagging and who is supporting what little activity there is in the IPO markets.
As for total proceeds the tech sector is holding a commanding lead with $6.3 billion of the $9.8 billion total so far in 2016. This has been a trend as tech has seen a slew of new filings. The issue with most of them has been quality. Young tech startups with little if any revenue and short history of sales. None the less, they have had little issue raising capital in the IPO markets.
As we have chronicled many times, health care has not only dominated the number of IPO's this year (totaling 50), but has also been the best performing sector of the IPO markets in terms of post IPO performance. Dominating over 50% of the total deals so far this year, health care continues to lead the way in a slow IPO market.
While tech (and health care tech) makeup over 75% of the deals this year, what we don't see is the traditional industrials, materials companies, and Utilities. This has been somewhat of a trend lately as tech related companies have taken over. Only 6 IPO's make up the previously mentioned sectors with under $1 billion in total proceeds. The sad part is that these companies tend to have the better financial performance and longer revenue growth.
It could be the narrow sector focus causing the IPO markets to under perform, or it could be the overall market health. Either way, one thing is for sure, if you don't like tech or health care names then the IPO markets have had little to offer you in 2016.