Actionable Ideas for Companies and Sponsors
Repeat Equity Offerings Prior to Lock-Up Expirations
Issuers and financial sponsors are rapidly returning to market after executing IPOs and follow-ons. This includes a record pace of offerings where underwriters have broken lock-up agreements after material share price appreciation. We expect this trend to continue as financial sponsors look to lock-in returns and new issues continue to outperform.
The trends in “first” follow-ons in 2013 include: (1) 25% priced within the IPO lock-up period, with the average follow-on price up 60% from the IPO price, (2) 38% priced within one month after the IPO lock-up expiration, with the average follow-on price up 65% from the IPO price, and (3) 85% of the first follow-on offerings priced before or within one month after the IPO lock-up expiration were sponsor-backed offerings.