GO
Loading...

Are IPO investors getting ‘deal fatigue’?

Amid a flurry of company flotations on stock markets across the world, investors may be struggling to catch their breath as "deal fatigue" sets in, analysts told CNBC.

The global initial public offering (IPO) market is off to a stellar start in 2014, with 239 deals done globally in the first quarter, a 47 percent jump from the same time last year, according to consultants EY. The activity has been buoyed by an improving economic picture and returning confidence in capital markets that was lost during the global financial crisis.

But with the mass of companies going public, investors are feeling weary, Edward Bibko, head of capital markets for EMEA at Baker & McKenzie said.

Read MoreBoom in UK IPOs led by 'bricks and clicks'

"I think that the window is really narrowing, rather than closing. It doesn't feel like we're retreating to 2012 levels, but certainly investors are becoming a lot more selective and they tend to favor more established companies as opposed to mid-cap or new entrants to the market right now," Bibko told CNBC in a TV interview.

"This quarter has been the best quarter for IPOs since 2011, and prices peaked in March so I think it's really just coming off the boil."

Dotcom valuations?

New York has led the way with 25 deals raising $8.6 billion in the first quarter of 2014, followed by Hong Kong and London, which raised $5 billion and $4.6 billion respectively, according to EY.

Justin Horrocks| iStock/360 | Getty Images

While many flotations have come off without a hitch, some companies have been burned, amid investor fears of bubble-like valuations and a lack of sound fundamentals adding to concerns over deal fatigue.

Read MoreKing Digital stumble causes concern in IPO land

Amid the bad IPO headlines was the news that over-50s insurance provider Saga priced its shares at the bottom of the range and U.K. clothing retailer Fat Face shelved its plans for going public. Added to that, King Digital, maker of popular game Candy Crush tanked on its stock market debut in New York.

"Where we are now is that any IPO will have to be of the top quality and at a very sensible valuation which was always the case, but it got a bit like the dotcom era where the market got a bit carried away," Chilton Taylor, head of capital markets at Baker Tilly, said in a phone interview with CNBC.

"There is only a limit to how many new issues institutions can get their mind around."

'Strong pipeline'

Yet the flotations keep on coming. On Tuesday Lloyds said it would float a 25 percent stake in its TSB arm, while last week, property website Zoopla, retailer B&M, and Eastern Europe's biggest budget airline Wizz Air, all announced their plans to go public.

Read MoreAlibaba IPO is good news for Yahoo's stock

Not all analysts are convinced about the onset of deal fatigue, instead suggesting that investors have a greater choice with a strong pipeline ahead.

"We are probably seeing, rather than fatigue, investors having a greater choice. Seeing we are at volumes of IPOs we haven't seen for a number of years, investors are looking at companies on a case by case basis and investing in stocks they like," John Ball, director of corporate finance in equity capital markets at Deloitte, told CNBC in a phone interview.

"Looking at our books at what we haven't announced, the pipeline still remains strong."