"People’s appetite for IPOs is back, and there is a mismatch between equity supply and demand," says Amundi Asset Management's Romain Boscher, following the best year for U.S. IPOs since the top of the tech bubble in 1999. “There was a sort of queue of companies planning to tap the market as soon as the opportunity was right. And now with higher prices and low volatility, that time has come. This is very favorable for IPOs.”
The usually sleepy First Trust U.S. IPO Index Fund (FPX) raked in $165M in Q4, the largest quarterly amount since its 2006 launch. Total annual inflows were a record $280M.
Among the major offerings on tap this year: Banco Santander's U.S. consumer lending unit and Blackstone's La Quinta hotel chain.
“There is just more risk appetite out in the market at the moment and people are prepared to pay more to participate, so we’ll see more of this,” says a fund manager. “It’s an opportunistic strategy.”