The IPO market's rocky performance in the latter half of 2011 is expected to continue into 2012, according to a recent survey of investment bankers by BDO USA. A year ago, nearly three-quarters of the investment bankers surveyed predicted an increase in U.S. IPOs. That number since has dropped to 50%. What's more, bankers are predicting an average IPO return on investment of just 3%; the return predicted a year ago was 18%.
"The lack of confidence coming through in the survey is consistent with the last half of 2011," says Brian Eccleston, partner in BDO's capital markets practice. In fact, after eking out a 1.2% return for the first six months of 2011, the FTSE Renaissance U.S. IPO Index dropped significantly, posting a negative 23.2% return for the last half of the year, according to Renaissance Capital. Eccleston attributes the shift in performance to increased concerns about the possibility of a recession in Europe, as well as lackluster economic performance this side of the Atlantic.