Health care sector is hottest on IPO circuit

Matt Krantz, USA TODAY

USA TODAY markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at [email][email protected][/email].

Q: What kinds of companies are pulling off IPOs this year?

A: It's looking like another boom year for IPOs.

Demand for initial public offerings is surging. And with the increase in demand, companies and their investment bankers are prettying themselves up for market.

So far this year, there have been 37 companies selling shares to the public for the first time, says Renaissance Capital, up 68% from the same point last year. And the proceeds raised by these deals is exceeding $7.0 billion, a 19% rise from the same point last year.

But there's a big myth among investors that it's just small technology companies that look for IPOs. In reality, that's about as far from the truth as possible. So far this year, just two technology companies have sold shares to the public, Renaissance says.

That means technology is just ahead of transportation as the source as the fewest number of IPOs. It's actually health care that's leading the IPO parade, with 20 deals followed by energy with six. Healthcare is getting a lift by the huge demand for biotech deals.

IPO experts see the rise of other industries, and not just a reliance on tech, as being a positive for the market. When investors get overly fixated on IPOs from just one industry, there's a rising chance of creating bubbles, something that often ends badly.

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