Flurry of Pipeline Activity Suggests Potential Spike in U.S. IPO Deal Flow

by: Renaissance Capital IPO Research

After a lull, IPO filing activity picked up again at the end of June, with 80 new or amended S-1 filings within the last few weeks. The flurry of updates, including several companies confirming their choice of exchange, suggests that many are moving ahead in the IPO process. Two of the big names that have filed amendments recently include auto finance company Ally Financial (ALLY) and auto supplier Delphi Automotive (DLPH). A number of technology companies have also filed updates, including Shanda Interactive spinoff Cloudary (READ) and on-demand software company Tangoe (TNGO). Toys R Us (TOYS), which originally filed with the SEC back in May 2010, also submitted an IPO amendment last week, perhaps signaling its intention of finally moving forward with its IPO. Meanwhile, a launch of Dunkin' Brands' (NASDAQ:DNKN) potential $400+ million IPO is rumored to be imminent.

The U.S. IPO calendar has filled up with five deals, all within the last few days, including oil storage MLP Oiltanking Partners (OILT), Chinese Internet company Xunlei (NASDAQ:XNET), and Sunoco spinoff SunCoke Energy (SXC). Headphone maker Skullcandy (SKUL) and online real estate portal Zillow (NASDAQ:Z) filed terms Wednesday. The proceeds from these deals total $695 million.

Many Tech IPOs Coming

Overall, the financial and technology sectors account for half of the 176 companies in the U.S. pipeline at the beginning of the third quarter, both representing 25% of total deals. The consumer sector follows with 14% of total deals.

Internet companies will likely continue to dominate the IPO market, with several high-profile offerings in the works. Zynga filed its much-anticipated S-1 on Friday, while Groupon (NASDAQ:GRPN) is already in the pipeline and similar online deal company LivingSocial is reportedly in talks to file for an IPO. All three could potentially raise more than $1 billion each with valuations of $10-$15 billion (or higher). As mentioned above, two smaller Internet companies, Xunlei and Zillow, were just added to the IPO calendar.

The clean-tech category also showed an increase in activity, with amendments filed by biofuel companies Ceres (CERE) and Myriant (MYRT), and initial filings from Luca Technologies (LUCA), Aspen Aerogels (ASPN), and Enphase (NASDAQ:ENPH). These follow recent biofuel IPOs this year from Solazyme (SZYM)(+41%), KiOR (NASDAQ:KIOR)(+0%), and Gevo (NASDAQ:GEVO)(+19.1%).

Despite some choppiness in IPO activity and performance in the second quarter, the recent increase in SEC filings suggests a potential pick up in deal flow in the coming months, particularly in sectors that have represented the bulk of the IPO market thus far in 2011.