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Vol. X,  Issue 3

  IPO  

 

  News Desk

 

 

The IPO Winners' Circle:

Year-End IPO Leadership

 1/16/12 After a fast start to the year (IPOs were well ahead of last year’s pace at the six-month mark), the IPO market hit a wall in late summer and early autumn and finished with fewer deals than in 2010. The final tally for 2011 was 145 offerings, a 14% decrease over 2010’s 168 deals. The total amount of proceeds raised in 2011 also fell year-over-year from $41.89 billion in 2010 to $37.35 billion in 2011.

The majority of last year’s IPOs (109 of the 145) were completed between January and July, after which deteriorating macroeconomic conditions drove issuers away, culminating in no deals getting done between August 17th and October 12th. The market did stage an end-of-the-year rally with 17 IPOs in November and 12 in December.

Despite the drop in completed deals in 2011, the number of preliminary registrations was up nearly 5% over the prior year. The total was 291 compared to 276 in 2010. The 2011 tally was the highest annual total for preliminary registrations since 2007. Over 100 companies that filed initial IPO registrations in 2011 remained in the pipeline at the end of the year.

Among the side effects of difficult market conditions in the second half of 2011 was a reduction in the number of non-U.S. headquartered companies that went public in the U.S. Thirty-four deals were completed by foreign issuers in 2011—half of which were headquartered in China—compared to 59 in 2010. After China, Luxembourg’s and the Netherlands’ three new issues apiece were the most for any one country in 2011.

Blank checks companies continued their comeback in 2011. After only one IPO in 2009 and seven in 2010, the industry saw 16 companies go public in 2011, making it the busiest SIC Code of the year. Close behind were Crude Petroleum and Natural Gas companies (SIC 1311) with 13 IPOs. If we add in related businesses such as drilling, oil field services, pipelines and gas transmission, then the energy industry emerges as the dominant IPO sector in 2011's market with 22 IPOs.

Pharmaceutical Preparations (SIC 2834) was the busiest industry in 2010 with 12 IPOs. While still active in 2011, the sector’s total fell to eight offerings for the year. That still represents an improvement over the four pharmaceutical IPOs in 2009, which followed no new issues in 2008. Eight REITs completed IPOs during the past year, down from 11 in 2010. The eight companies that went public raised an aggregate of $2 billion, which accounted for 5.5% of 2011’s total IPO proceeds.

Prepackaged software companies remained a key market contributor in 2011, tallying nine IPOs to match the group’s 2010 performance. Despite being the third busiest industry sector by number of IPOs, software deals accounted for only 2.7% of the year’s total proceeds. 

Hospital operator HCA Holdings completed the largest IPO in the U.S. in 2011 with its $3.79 billion offering. The company, which went public March on 9th, was one of six issuers that raised $1 billion or more in their 2011 market debuts. Kinder Morgan’s $2.86 billion deal was the year’s second largest, followed by the $1.64 billion offering by Nielsen Holdings last January. Yandex, Arcos Dorados Holdings and Zynga were the only other companies to generate at least $1 billion in proceeds in 2011.

And now for the IPO professional leaders of 2011 – The IPO Winners’ Circle.

IPO Law Firms The number of IPO active law firms in 2011 fell to 117 after reaching 134 the prior year. In 2011, six firms totaled double digits in the number of assignments, down from ten double-digit firms in 2010. Only two law firms hit double digits in 2009.

Leading the way in 2011 was Latham & Watkins, which had been co-leader by number of IPOs in 2010 alongside Simpson Thacher & Bartlett. Simpson Thacher dropped to sixth in this year’s rankings with 11 representations compared to 30 in 2010. Latham improved on its 2010-leading total with 33 assignments, accounting for 22.8% of the market.

Second place in 2011 was claimed by Davis Polk & Wardwell (winner in both 2008 and 2009), which served as issuer’s or underwriter’s counsel on 23 IPOs. The firm improved two places on its 2010 ranking. Wilson, Sonsini, Goodrich & Rosati jumped six places from the previous year to hold the number three spot for 2011. The firm notched 16 representations, putting it just ahead of Skadden, Arps, Slate Meagher & Flom, which worked on 15 deals. It marks the second straight year that Skadden slipped one place in the rankings.

By virtue of the energy industry’s strong showing in the 2011 IPO market, Vinson & Elkins vaulted into the top five after finishing 12th in 2010. The firm handled 13 IPO assignments, five more than it did the previous year. Andrews & Kurth, another firm that counsels energy companies, also surged in the rankings, moving from 40th in 2010 to seventh in 2011. 

Other law firms that showed significant improvement between 2010 and 2011 were DLA Piper, which climbed from 26th to ninth, and Ellenoff Grossman, which ended the year in tenth place after finishing 33rd in the prior year. Ellenoff Grossman is an adviser to blank checks companies, and its yearly performance is tied closely to the performance of that industry sector.

Cooley counseled eight IPO issuers in 2011, placing it 12th in the annual rankings. The firm had finished 25th the year before. Akin, Gump, Strauss, Hauer & Feld improved from 56th in 2010 to 15th in 2011, while Fenwick & West cracked the top 20 after finishing 57th in 2010.

By aggregate proceeds generated in 2011, Davis Polk claimed the top spot with $8.39 billion, representing 22.5% of the entire annual total. Davis Polk also topped this ranking in 2010 because of its work on General Motors’ $15.8 billion IPO. In second place with 19.2% of the aggregate proceeds reaped in 2011 was Simpson Thacher, whose IPOs garnered $7.17 billion. Latham & Watkins’ deals netted $5.43 billion, good for fourth place in the ranking by aggregate offer amount. 

IPO Law Firms

Winners’ Circle 2011

Top Twenty IPO Law Firms

Combined Issuer’s & Underwriters’

Representations

Ranked by Number of IPOs

(tie-breaks by Aggregate IPO Offer Amt.)

2011

Rank

IPO Law Firm

No. of IPOs

% of Total

Aggr.

IPO

Offer

Amt.

($mils)

% of Total

’10

Rank by

No. of

IPOs

1

Latham Watkins

33

22.8%

$5,427.7

14.5%

2

2

Davis Polk

23

15.9%

$8,386.2

22.5%

4

3

Wilson Sonsini

16

11.0%

$2,345.8

6.3%

9

4

Skadden Arps

15

10.3%

$4,067.0

10.9%

3

5

Vinson Elkins

13

9.0%

$3,227.4

8.6%

12

6

Simpson Thacher 

11

7.6%

$7,171.6

19.2%

1

7

Andrews Kurth

9

6.2%

$4,478.4

12.0%

40

8

Baker Botts 

9

6.2%

$1,901.6

5.1%

18

9

DLA Piper

9

6.2%

$1,697.5

4.5%

26

10

Ellenoff Grossman

9

6.2%

$547.0

1.5%

33

11

Maples Calder 

8

5.5%

$2,088.7

5.6%

5

12

Cooley

8

5.5%

$1,741.7

4.7%

25

13

Conyers Dill

7

4.8%

$1,643.9

4.4%

6

14

Ropes Gray

6

4.1%

$1,834.0

4.9%

41

15

Akin Gump 

6

4.1%

$1,017.0

2.7%

56

16

Shearman Sterling

5

3.4%

$1,912.5

5.1%

8

17

Commerce Finance

5

3.4%

$1,219.0

3.3%

7

18

King Wood

5

3.4%

$698.4

1.9%

22

19

Fenwick West

5

3.4%

$621.5

1.7%

57

20

Mintz Levin 

5

3.4%

$180.0

0.5%

72

 

Total in Period

145

 

$37,351.0

 

 

-- excludes overallotment option --

--equal credit for joint representations--

IPO Vital Signs Subscribers see,

#160. IPO Counsel (IPO Issuer's plus

IPO Underwriters' Mandates) - 

IPO Leadership Rankings

IPO Lead Managers – The number of investment banks acting as lead manager, which had improved from 33 in 2009 to 49 in 2010, fell slightly in 2011 to 44. The number of lead managers with total IPOs in the double-digits also was off 2010’s pace (12 in 2010 and 10 in 2011).

Measured by number of IPOs, Morgan Stanley claimed the number one ranking for the second straight year with 45 deals. Morgan Stanley also was the top lead manager by aggregate offer amount with $20.84 billion. Similar to 2010, JPMorgan was one of Morgan Stanley’s closest competitors. The underwriter managed 32 IPOs in 2011, the same number as Deutsche Bank, and earned the second place ranking based on aggregate proceeds. Deutsche Bank’s third place finish is an improvement of two places on its 2010 ranking. 

In 2011, Goldman Sachs served as lead underwriter on 31 offerings that collectively raised $18 billion. Those totals landed Goldman in second place by aggregate proceeds, and in a 4th place tie by number of IPOs. Citi is the other underwriter that led 31 IPOs, but its $13.5 billion in aggregate offer amount fell short of Goldman’s total. BofA Merrill Lynch, which was the top lead manager in 2009 only to slip to 7th place in 2010, moved up to number six in the 2011 rankings.

Credit Suisse dropped from 4th to 8th place between 2010 and 2011, although it was only one deal behind 7th place finisher Barclays Bank. As it did in 2010, the industry remained stable in 2011 with the top eight lead managers staying the same (with slightly shuffled rankings) year over year.

Wells Fargo broke into the top ten (9th position), improving on its 2010 12th place ranking. Raymond James improved from 16th to 11th place, while Rodman & Renshaw dropped out of the top 15 ranking after finishing 14th in 2010.

Goldman Sachs was the only underwriter to serve as lead manager on each of 2011’s four largest IPOs (HCA Holdings, Kinder Morgan, Nielsen Holdings and Yandex). Morgan Stanley helped lead three of the four, with Kinder Morgan being the lone exception. Barclays Bank’s strong showing in 2011 included serving as co-lead on the HCA Holdings and Kinder Morgan deals, the two largest IPOs of the year. 

IPO Lead Managers

Winners’ Circle 2011

Top Fifteen Lead Managers

Rank by Number of IPOs

(tie-breaks by Aggregate IPO Offer Amt.)

2011

Rank

IPO Lead Manager

No. of IPOs

% of Total

Aggr.

IPO

Offer

Amt.

($mils)

% of Total

’10

Rank by

No. of

IPOs

1

Morgan Stanley 

45

31.0%

$20,841.0

55.8%

1

2

JPMorgan

32

22.1%

$15,219.3

40.7%

2

3

Deutsche Bank 

32

22.1%

$13,034.3

34.9%

5

4

Goldman Sachs

31

21.4%

$18,005.0

48.2%

3

5

Citi

31

21.4%

$13,544.1

36.3%

6

6

BofA Merrill Lynch

30

20.7%

$12,684.7

34.0%

7

7

Barclays Bank

24

16.6%

$12,762.7

34.2%

8

8

Credit Suisse 

23

15.9%

$12,348.7

33.1%

4

9

Wells Fargo

15

10.3%

$7,648.1

20.5%

12

10

UBS 

11

7.6%

$1,918.4

5.1%

9

11

Raymond James

9

6.2%

$2,073.7

5.6%

16

12

RBC Capital Markets

9

6.2%

$1,993.4

5.2%

11

13

U.S. Bancorp Piper 

7

4.8%

$605.4

1.6%

10

14

Jefferies

6

4.1%

$637.2

1.7%

13

15

Stifel Nicolaus

5

3.4%

$353.6

0.9%

15

 

Total in Period

145

 

$37,351.0

 

 

-- excludes overallotment option --

-- equal credit for joint mandates --

IPO Vital Signs Subscribers see,

#175. IPO Lead Managers -

IPO Leadership Rankings

IPO Auditors – The number of accounting firms acting as IPO auditors remained relatively stable in 2011, falling only two from 2010’s total. Twenty-one auditors worked on IPOs and, as expected, the Big Four firms held onto the top four positions in the rankings. Grant Thornton finished 5th again, but closed the gap on its competitors. The firm worked on 10 IPOs, just three fewer than 4th place finisher KPMG.

In 2011, Ernst & Young held onto the number one ranking. 2009 (when Deloitte & Touche claimed the top spot) is the only year since 2004 that Ernst & Young has not finished first among IPO auditors. The firm’s 40 IPOs in 2011 were six better than PricewaterhouseCoopers’ performance. Deloitte finished a distant third with 16 assignments for the year. KPMG and Grant Thornton rounded out the top five.

As measured by aggregate offering amount, Ernst & Young bested its nearest competitor, PwC, by $4.8 billion. Ernst & Young’s $14.74 billion in proceeds represented 39.5% of the year’s total. PwC’s $9.92 billion was the second largest total for 2011. Deloitte and KPMG tallied nearly identical aggregate proceeds with $4.178 billion and $4.174 billion, respectively. Grant Thornton, with $1.48 billion in proceeds, was the only other auditor to surpass the $1 billion mark in total offering proceeds for the year.

Nine of the top ten auditors remained the same from 2010 to 2011. The one change was that McGladrey Pullen exited the ranking, and Marcum made an appearance at number eight. Marcum worked on five IPOs and claimed 3.4% of the market, in lock-step with BDO International.  

IPO Auditors

Winners’ Circle 2011

Top Ten IPO Auditors

Rank by Number of IPOs

(tie-breaks by Aggr. Offer Amt.)

2011

Rank

IPO Auditor

No. of IPOs

% of Total

Aggr.

IPO

Offer

Amt.

($mils)

% of Total

’10

Rank by

No. of

IPOs

1

Ernst & Young

40

27.6%

$14,740.4

39.5%

1

2

PwC

34

23.4%

$9,920.1

26.6%

3

3

Deloitte & Touche

16

11.0%

$4,178.7

11.2%

2

4

KPMG

13

9.0%

$4,174.5

11.2%

4

5

Grant Thornton 

10

6.9%

$1,477.2

4.0%

5

6

Rothstein Kass

8

5.5%

$715.0

1.9%

7

7

BDO International

5

3.4%

$797.7

2.1%

9

8

Marcum

5

3.4%

$204.5

0.5%

--

9

Crowe Horwath

2

1.4%

$86.0

0.2%

10

10

UHY

1

0.7%

$333.5

0.9%

8

 

Total in Period

145

 

$37,351.0

 

 

-- excludes overallotment option --

IPO Vital Signs Subscribers see,

#184. IPO Auditors -

IPO Leadership Rankings

 

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