This is another slow week for IPOs — only five are scheduled, none of any size — and that has a few in the business a little nervous.
The IPO market for 2015 is closing fast. There are only a few weeks left in the year. Nothing will get done Thanksgiving week or the second half of December.
That leaves roughly four weeks for a lot of waiting IPOs to get through the door.
We are well below the average number of IPOs and the amount raised compared to the last several years.
But the number of companies looking to go public has not slowed down. This means a lot of companies are hoping to get through the doors in the next few weeks.
Tops on the list: Match.com with a potentially $700 million offering, Square at $275 million, Ballast Point Brewery at $173 million, and cybersecurity firm Mimecast at $100 million.
Then there are some big names that would sorely love to go, but are looking increasingly improbable for 2015: Albertson's, Neiman Marcus, and even Univision.
So what? This is very bad news for private equity and venture capital that they can't get deals out. I'm not just talking about Albertson's or the other big leveraged buyouts.
I'm talking about all the unicorns — the companies with private valuations above $1 billion — the Ubers, Airbnbs, and all the others.
Don't kid yourself. Most of them are thinking of going public some time in 2016. The private equity and venture capital (and mutual funds) that own these unicorns need to cash out and will get increasingly antsy as big names before them have trouble getting to market.
And remember, there is unprecedented money in alternative investments. It got there because the public pension plans said that's a good way to get superior returns. They have allocated more money to venture capital than ever before.
There's been one good effect from the poor IPO market. Those that have gone public have dramatically cut prices, and the IPO after-market — how much investors have made since the companies went public — has gotten much better.
There were 16 IPOS in October. On average, they priced 22 percent below the midpoint of the price range — that's a big discount! The total return, how much they are up since they went public, has averaged 4 percent.
The Renaissance Capital IPO ETF, a basket of roughly 60 of the most recent IPOs, was up 7.9 percent in October, not far from the S&P's 8.3 percent return.
Here's what the IPO market has looked like for the last few years (source: Renaissance Capital):
The $85.2 billion raised in 2014 was distorted by the $21 billion raised by Alibaba, the biggest IPO in the United States ever. Subtracting that, it's been fairly typical to raise between $42 billion and $60 billion in the IPO market in the last three years.
This year's $28 billion thus far leaves us well short of the average.