IPO Trends for Investors to Consider in Q4 2015

Earlier this year, companies were going public at the fastest pace on record in years, but that activity has slowed over the past few months, due primarily to market volatility brought on by slumping oil prices, sustained troubles in the Eurozone and China's slowing growth.

Approximately 152 IPO deals were completed to date in 2015, which is a 34% drop compared to the same period in 2014. Returns are also on the decline from 2014's record breaking levels, with total proceeds down 62% ($28.1 billion) as compared to those delivered during this same time last year.

While the window has narrowed slightly for companies looking to go public this year versus years past, there are still some high-profile IPOs that are expected to list before the end of the year, as well as some interesting trends on the horizon for investors to keep an eye on over the next couple of months.

2015 IPO Highlights. In the first three quarters of 2015, we saw a number of household name companies go public this year, including Fitbit, Planet Fitness, Etsy, and Shake Shack. This type of activity points to an increase in investor appetite to get in on the ground floor and buy stock in well-known companies, which bodes well for future established brands looking to go public in the coming months. For example, the Ferrari IPO at the start of Q4 outperformed expectations and opened to the public at $60 per share even though its offering price was valued at $52 per share at the time of its listing.

In terms of hot performing sectors to date, healthcare and consumer goods have experienced the most activity this year, representing 75% of all IPOs recorded in the first three quarters. Of the 152 IPOs listed in 2015, 71 companies are in the healthcare sector, while IPOs from consumer goods companies accounted for three of the five largest public offerings of the year.

IPOs in the technology sector have had a lukewarm showing in 2015, with the third quarter documenting the fewest tech IPOs on record since Q1 of 2009. Pure Storage and First Data, for example, which were both highly anticipated offerings, experienced tepid pricings at their debut. And, fears about the health of the global markets have led many companies to postpone going public until conditions improve, such as Albertson's and Neiman Marcus. While not ideal, the decision to delay an IPO has its advantages, such as building consumer trust and thus creating a potentially stronger return once the company does decide to go public.

What to Watch Through the End of 2015. Last year's IPO market raised $85.2 million, the highest total in the past 10 years. And, given the typical slowdown in deal activity over the holiday months, it is unlikely that we'll see a big bump in IPO deal flow through the end of the year.

While 2015 has been sluggish in comparison to 2014, there are several big name IPOs for investors to keep an eye on as 2015 comes to a close. Many of these companies are established brands and highly anticipated offerings, such as Square, Albertson's, Univision, Match Group, Vizio, McGraw Hill, Petco and Pantheon.

Finally, as the crisis in the Eurozone continues and China's growth remains unstable, investors should keep an eye on international companies seeking to go public in the U.S. in Q4. Over the past three quarters of 2015, the U.S. exchanges attracted the most cross-border IPOs than any other country this year. Specific deals to watch in this area include Bermuda based Digicel, which is seeking to raise $2 billion on the New York Stock Exchange, making it one of the largest foreign issuer IPOs in 2015. Digicel's offering, like Alibaba's IPO in 2014, is the type of large billion-dollar listings that could attract even more foreign issuers to go public in the U.S., representing a huge opportunity for savvy investors to watch out for as 2015 comes to a close.