Why 2014 could be a ‘record year’ for stock listings
Could the boom times be back? Between 250 and 300 initial public offerings (IPOs) will launch in the first three months of 2014 according to professional services firm EY — a level not seen since the financial crisis hit in 2008.
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EY forecast that 2014 will be a "record year," with improving economic fundamentals and strong global liquidity fueling new listings.
"The pace will be set in the first quarter — we anticipate that total proceeds for first quarter 2014 could be in the range of $35-$45 billion, on a global volume of 250-300 deals. The forecast would re-set IPO activity on par with 2005-08 first-quarter levels," said Maria Pinelli, EY's vice-chair of strategic growth markets.
Pinelli and her colleagues are the latest in a string of economists, bankers and strategists to turn bullish on the IPO market, which started to reignite in the latter half of 2012.
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"I think our pipeline for next year is growing very strongly," Gareth McCartney, UBS's head of equity syndicate for EMEA (Europe, the Middle East and Africa), told CNBC.
"I think reference multiples in the secondary market are encouraging for vendors in terms of valuations. Plus, I think from the investor base, they have had good performance out of a number of deals this year, therefore their appetite is strong. So that is all building for quite a strong 2014, and particularly the first half of 2014, we see as being very strong," he explained.
The strong performance of IPOs in 2013, coupled with the rally in equities, has encouraged companies to bring forward prospective listings said Robert McCooey, the senior vice-president of relationship management at the Nasdaq exchange.
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"2014 looks like it is going to be a strong year… Because of the way the markets have acted, I think there are a number of companies that have moved up their timelines — they may have been looking at late '14, early '15 for an IPO, and now they are looking at the first half of 2014," he told CNBC last week.
EY's estimates 864 deals took place in 2013, raising a total of around $163 billion. Upcoming deals include Hilton Worldwide's listing of up to $2.37 billion, which is seen taking place this Thursday and would be the biggest-ever hotel IPO. It would also be the second-biggest IPO of the year, after oil pipeline holding company Plains GP Holdings raised $2.82 billion.
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A survey of 120 global "corporate decision-makers" by Thomson Reuters and Freeman Consulting Services found that 78 percent of respondents in the Americas thought companies would fund growth through share offerings in 2014. EMEA was seen lagging the Americas and Asia-Pacific, although a need for liquidity could drive secondary listings in the region.
Pinelli predicted strong activity in both the U.S. and Europe next year, driven predominately by private equity. In addition, the re-opening of mainland Chinese exchanges in the first quarter after a 14-month ban on new listings will bring over 700 companies into the queue of those waiting to float, she said.
Sectors that will lead the way include technology, real estate and financial, Pinelli added.
(Read more: HSBC UK spin-off will have to join the queue)
"We're moving now in to a phase where we are broadening out in sector," said McCartney.
"When we look back to the second half of last year, it was very much quality and dividend yields that were driving (the market), so sectors like telecoms were very active. I think we are now at a phase in the cycle where that is broadening out and the market now has appetite for smaller cap companies and for a broader number of regions."
—By CNBC's Katy Barnato