SAN FRANCISCO (MarketWatch) -- U.S. initial public offerings in 2006 raised 28% more money for companies than IPOs raised during the previous year, and 2007 could be even better, according to a report published Wednesday by accounting firm PricewaterhouseCoopers.
Private-equity firms, keen to exit some of the companies they've acquired in recent years, will be a major source of IPOs this year, as they were in 2006, the firm added.
IPO proceeds on U.S. exchanges hit $50 billion in 2006, just $2 billion short of the decade's high set in 2004, and 28% above the $39 billion raised last year. The final quarter of 2006 was the strongest quarter for IPOs this decade, PWC noted.
"Virtually all of this growth came from IPOs backed by financial sponsors including private equity firms," Scott Gehsmann, a Transaction Services Capital Markets partner at PWC, said in a statement.
This year has also started strongly, with 64 IPOs raising $12.1 billion during the first quarter. That's up from $11.9 billion from 56 IPOs in the first quarter of 2006, and $10.8 billion from 43 listings in early 2005, he added.
Private-equity firms have acquired roughly $700 billion worth of companies in the past two years. These firms will now be looking to exit some of those investments by taking them public all over again, he explained.
"Absent a significant equity market decline, we expect 2007 to be a stronger year for U.S. IPOs than 2006," Gehsmann concluded.
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