IPO investors score best year since tech boom

1:28 p.m. EST December 22, 2013  Investors' appetite for IPOs is reaching levels not seen since the rip-roaring stock market during the dot-com boom in 2000.

Thanks to a white-hot stock market in 2013, companies are successfully launching their initial public offerings like they haven't since the tech-stock boom at the start of the century.

The comeback is a welcome development because it shows companies have an eye to grow and expand, potentially creating jobs and fanning economic growth. And analysts think the appetite for IPOs remains strong enough to keep the run going into 2014.

"It was a tremendous year for IPOs," says Josef Schuster of IPO tracking firm IPOX Schuster. "And it's shaping up to be another good year."

So far this year, 222 companies have sold shares to the public in an IPO, says Renaissance Capital. That's that biggest number since the halcyon days of tech IPOs in 2000, when there were 406.

And it's not just the number of deals, but the amount of money being raised that's approaching high-water marks set in the Internet boom. Companies raised more than $50 billion from IPOs -- a level not seen since 2000, Renaissance says.

Some of the big trends that IPOs watchers point to for direction about the future include:

• Broad participation. This IPO boom looks much healthier than the one in 2000. Nearly all the major industries are generating IPOs, rather than relying on just a single industry like technology in 2000, says Jackie Kelley, America's IPO leader for Ernst & Young. Social media giant Twitter may have grabbed the headlines, but it was health care, fueled by the biotech industry, that generated the most IPOs, with 22%. Technology came in at 18% and 11% came from energy, Kelley says.

• Powerful finish. IPO watchers were especially encouraged by the strength of the IPO market going into the end of the year. Massive IPOs from hotel chain Hilton and food service company Aramark pushed proceeds raised to the highest level since 2000, says Stephanie Chang of Renaissance. During the fourth quarter, 69 IPOs were done, just behind the 70 done in the busy fourth quarter of 2007, Chang says.

• Healthy pipeline. There are already about 56 tech companies, 54 consumer products companies and 37 health care firms on deck for IPOs next year, says Matthew Toole, who researches IPOs for Thomson Reuters. Investors are showing an appetite for deals in most sectors, says Scott Cutler, head of global listings at the New York Stock Exchange. "The market is broad across geographies, sectors and sizes," he says.

Giving the level of interest by private investors and venture capitalists to sell companies when the market is good, the IPO market looks like it's poised for another strong year, Cutler says. Seeing 170 to 200 IPOs in a year should again be a normal expectation, rather than a stretch goal, he says.

"It makes sense for companies to go public (again)," Toole says. "Investor demand is there."

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