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Middle Market IPOs Soar Despite Drop in Capital Raised

January 13, 2015

Fenwick & West securities partner Dan Winnike was quoted by Law360 in an article on the strong year for initial public offerings in 2014 – the busiest year for IPOs since 2000. 

A healthy stock market helps to explain the upswing, Winnike told the publication. The market faced only occasional rocky patches in 2014, he said, and even when energy prices began to dip last fall, the climate for IPOs didn't suffer lasting damage.

"Basically, the capital market situation has improved since the collapse in 2008/2009, Winnike explained to Law360, adding, "The IPO market, really starting at the end of 2011, has been quite robust, relatively speaking."

Despite the stellar year for IPOs overall, companies raised 11.4 percent less in capital year-over-year in 2014. According to Winnike, this seeming contradiction can be explained by the fact that many IPO launches were undertaken by smaller-cap companies, especially in one sector.

"One of the things that we noticed was that there were quite a few more life science companies that went public in 2014 than 2013," Winnike said. "The number of life science IPOs was up 50 percent or more."

As for the decline in capital raised, Winnike continued, "There are a few huge companies [on the list of IPOs], but by and large the life sciences companies tend to raise smaller amounts of capital than tech companies."

The full article is available through Law360's website (subscription required).