Ernst & Young Counts More IPO Filings as Sign of Increasing Activity

1/29/10Follow @bvbigelow

A study released today by Ernst & Young shows that 53 companies submitted the necessary paperwork during the fourth quarter of 2009 to hold initial public offerings—the highest number of new registrants in a quarter since 2007.

At of the end of December, Ernst & Young counted 54 companies in the U.S. that were ready to go public—and are seeking to raise a total $10.3 billion. There have been quarters with many more IPO filings over the past two years. And there have been quarters in which companies sought to raise more capital.

But the sharp increase in the number of companies seeking to go public was viewed as a resurgence in IPO activity by Jackie Kelley, Ernst & Young’s Americas IPO leader, based in Irvine, CA. “This is probably one of our most optimistic quarters in the past two years,” Kelley says. “The more that register, and the more that are in the pipeline means that more deals are likely to get done.”

Of the 54 companies waiting to go public, 18 are based in California, including two in the San Diego area. Maxlinear, a Carlsbad, CA-chip design company, disclosed on Nov. 6 that it plans to raise about $100 million in a stock offering. San Diego-based Trius Therapeutics, a biotech developing a new antibiotic for treating life-threatening bacterial infections, also disclosed in a Nov. 6 filing that it plans to raise $86 million. Both companies are still waiting.

Kelley says she’s encouraged because the average deal size is smaller, at $191 million. A year ago, the average deal size was almost $278 million, about 45 percent higher, according to Ernst & Young data. She says that reflects the fact that the larger and more mature companies were better able to access the IPO market.

Kelley says Ernst & Young also has been meeting recently with many more companies that are exploring the requirements for an IPO. “We’re having a lot of discussions with companies right now,” Kelley says, indicating IPO activity will continue to step up this year.

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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