New research on the historical performance of IPOs shows where investors have found the most value.
Analysis from UK-based prime broker IG Prime examines which types of companies have risen the most since their IPOs. Among companies listed on the Nasdaq and the New York Stock Exchange, the best performers are those in the basic industry sector, which includes the discovery, development and trading of raw materials. The median share price of these companies was 160% of their IPO value in January, according to the report.
Companies in the technology and capital goods sectors also outperformed, with median IPO values of 157% and 143%, respectively. The median energy company, however, was trading at just 72% of IPO value, the lowest of any industry.
IG Prime reviewed companies listed on the Nasdaq, NYSE, London Stock Exchange and Hong Kong Stock Exchange. The data goes back to 1985 for companies in the United States, 1988 for those in the United Kingdom and 2017 for those in Hong Kong.
In January, the median share price of companies in the UK was 105% of their IPO value, slightly higher than the median value of 103% of companies listed in the United States. The best performing UK sectors included industrials, consumer staples and utilities, while energy companies were again at their lowest, trading at just 10% of their IPO values. In Hong Kong, however, energy was the best performer, with a median price of 239% of IPO value.
In the United States, Vermont-based public companies lead the pack, with a median price of 484% of their IPO values. The other top states were Iowa and Kentucky, where the companies traded at 359% and 264% of their IPO values, respectively.
“Our research shows that IPOs can encourage investors and shareholders to invest, thereby increasing long-term overall returns,” said Max Hayden, global head of prime brokerage sales at IG Prime. II in an email. But the wide performance gaps suggest investors should “evaluate both the company, the sector and the financial market in advance, as all factors are volatile and subject to change at any time”, he said. he declares.
In general, companies that went public in previous years generated better returns, according to the report. For US companies that went public in the early 2000s, the median stock price reached 467% of their original value.
“Unsurprisingly, companies that had their IPOs more recently still had roughly the same value per share, while stock prices from previous years’ IPOs varied wildly,” the report said. “It’s confirmation that long-term strategies are more likely to see steady growth – a familiar point of wisdom.”