In a further sign of economic rebound, the US stock market surpassed pre-recession levels for the first time, hitting a pace this year that puts it on track to reach the heights achieved just before the financial crisis.
So far this year, 64 companies have raised $16.8 billion, the Wall St. Journal reported, citing Dealogic data. In the same period in 2012, the most financially robust year since the financial crisis, 73 companies raised $13.1 billion.
Last week was Wall St.’s busiest since December of 2007, with 11 US companies reaching IPO.
A more robust stock market provides much needed capital for US companies to reduce debt or invest in their businesses, and is seen by economists as a sign of recovery. The market is also not seeing the wide price swings that have plagued the market since the start of the recession. Stocks have been steadily climbing, encouraging investors to take risks on investing in companies that have only recently gone public. The upward trajectory could also have a snowballing effect.
Successful IPOs tend to encourage other startups to go public.
“I think you’re seeing a really good kind of stable sweet spot,” said Jim O’Donnell, chief investment officer at San Francisco-based Forward Management, told the Wall St. Journal.
Though the IPO market is still a good distance away from the bubble years of the 1990s, 2013 is shaping up to be the steadiest investment year since the crisis began, the paper pointed out.
Companies are also going public at more reasonable prices, with only 29 percent of IPOs in 2012 falling below their opening day price range, the lowest since the crisis began. More stocks are also rising following their debut. While only 19 percent of IPOs dropped on their first day of sale in 2012, that’s an improvement from the 31 percent average in 2008 to 2012.
Some of the year’s strongest IPOs include Fairway (FWM), a supermarket in New York, and SeaWorld Entertainment (SEAS +4.84%), the aquatic animal and roller coaster themed amusement park.