Is the U.S. IPO market back?

For 2012 it was the best among a group of global underperformers, but 2013 could be even better.

Worldwide initial public offering (IPO) issuance fell almost 30% in 2012, to $97 billion, the lowest level since 2008, according to Renaissance Capital. But there are reasons to expect a better showing in 2013, particularly in the United States, say experts.

In its year-end IPO market report, Renaissance Capital blamed a weak stock market in China, in particular fewer Chinese government–backed IPOs on the Shanghai and Hong Kong exchanges, for the global decline. IPO proceeds dropped 42% in the Asia Pacific area, but a 64% falloff in crisis-plagued Europe also dragged on funds raised globally.

In North America, on the other hand, proceeds from IPOs rose almost 16%, to $40 billion, and the region grabbed 41% of all IPO funds raised globally, up from 25% in 2011. Seventy-four first-time issuers debuted on the Nasdaq and the New York Stock Exchange so far this year, according to Renaissance Capital, down from 84 last year. However, they raised slightly more equity capital.

Facebook’s (FB) $16 billion market debut in May, though bungled, juiced North America’s proceeds total.

On a performance basis, U.S. IPOs stood out. IPO shares globally rose 5.5% from their offer price on average, as of December 12. But second to the Middle East and Africa, where there were only a handful of offerings, North American IPOs had the best return, at 12.5%.

Top individual U.S. IPOs for 2012, all of whose shares at least doubled, were Guidewire Software (GWRE), Nationstar Mortgage (NSM), and Five Below (FIVE), a teen discount retailer.

“The positive returns helped revive global IPO activity at the end of 2012 and should support stronger issuance in 2013 from the large $200 billion global IPO pipeline,” according to Renaissance Capital’s report.

Heading into 2013, 294 companies are in the global IPO pipeline.

Tim Keating, chief executive officer of Keating Capital, a business-development company, said less volatility, solid equity-market performance in 2012, and better aftermarket returns for investors this year are positive signs for companies looking to go public in 2013. He expects between 125 and 150 U.S. companies will list in 2013.

“If I had to look into the crystal ball for 2013, based on the announcement from the Federal Reserve this week, [chairman] Bernanke intends to inflate [his] way out of [the economic slowdown], and that bodes well for the moment for equities,” says Keating. “What the Fed is doing is forcing every investor in the country to move out on the risk curve, so we have to see some flow into equities in the short term.”

In another positive, Keating says institutional investors and underwriters showed great discipline pricing IPOs this year (with the exception of Facebook), and he thinks that will continue in 2013.

Next year could also bring some of the first tangible results from the Jumpstart Our Business Startups Act, which eases some of the compliance burden that newly public U.S. companies face. The new law will draw in companies “that have been neutral, or worse, averse, to an IPO because of Sarbanes-Oxley,” Keating says.

The fiscal cliff is a wildcard, but Keating doesn’t think it will cause a giant spike in volatility, which can dampen an IPO market. “Equity investors know the consequences right now; volatility is typically associated with an unexpected or unknown event,” he points out.

The largest prospective IPO in the U.S. pipeline, as in other countries, involves a company at least partly owned by the government. Ally Financial, the auto-finance company that was once part of General Motors, is the largest pending U.S. IPO, according to Renaissance Capital.

But Ally’s deal, which the company hopes will allow it to repay some of its $17.2 billion federal bailout, has been on the shelf for a year and a half as the company battles with creditors of its bankrupt mortgage subsidiary.

Globally, Seibu Holdings, a railway and property firm in Japan, is estimated to be the largest pending IPO, at $12.4 billion. The IPOs of Sinopec HK, a unit of China’s state-owned refining and petrochemical company, and ING’s European life-insurance unit (part of ING’s effort to repay a Dutch bailout) are also estimated to be among the largest offerings.

While big deals can drive up yearlong dollar volumes, in general the billion dollar–plus deals are the anomalies and do not drive the health of the IPO market, says Keating.

“Facebook I will concede was an exception, because it was a household name and so much hope had been pinned on Facebook in particular bringing individual investors back to the equity markets,” says Keating. “But generally the big ones are not the IPO market’s bread and butter.”

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