After a particularly strong close for the U.S. IPO markets last year, the first quarter of 2015 took a sharp turn with only 38 deals, which raised a total $5.62b, according to EY's Global IPO 2015 Q1 Report. While the first quarter is traditionally slow, this is a drop of 46.5% in the number of deals and a 53% drop in capital raised from Q1 2014. Historically, the U.S. market led the global IPO markets, but for one of the first quarters, it lands behind Asia-Pac and EMEIA. Nonetheless, with healthy U.S. economic conditions and a backlog of companies from private equity and venture capital firms looking to exit, the 2015 IPO market should shape up to be a strong year.

A total of 291 companies made initial public offerings in 2014, which was the best year for IPOs in over a decade. 2015 started at a later and different pace, as the first deal wasn't even offered until January 16. "Quite simply, the pipeline ran dry in 1Q15," says Jackie Kelley, EY Global and Americas IPO Leader "Deals that were originally slated for 2015 were pushed out in 4Q14, during favorable conditions. This was a response to the October volatility." 

March is building as a stronger month for IPOs with at least 15 deals being offered, up from the 10 in February. In addition, the more recent filings have brought deals north of $100m entering the pipeline. 

While some have warned of bubbles in certain sectors such as a life sciences and technology, the numbers don't indicate this as the distribution of deals across the sectors line up to previous years. Even more interesting is that the energy and power sector lead the way, accounting for approximately 25% of the proceeds, followed by healthcare (21%) and technology (18%). 

In addition, the largest player on the U.S. exchanges was an MLP offering from Columbia Pipeline Partners LP, which raised $1.24b. When compared with the larger ticket IPOs in 2014 such as Alibaba, which raised $25b, or Synchrony Financial, which raised $2.95b, there was no considerable IPO player this quarter. This is on trend with the average deal size continuing to decline.

Cross-border deals continued to build for the U.S. and accounted for 29% of the IPOs listed on the U.S. exchanges. These 11 deals raised $1b. These numbers are a slightly higher proportion than 2014, which suggests more foreign entrants view the U.S. exchanges as favorable. 

Perhaps the most compelling evidence of this growing pipeline is the strong number (21) of PE- and VC- backed deals. In fact, VC-backed offerings represented 42% of all the deals and their exits allow for capital to fund the ecosystem.  In addition, there's over an estimated 4,000 companies, which have been held by private equity firms for longer than five years that should be looking for an exit strategy.         

Year-over-year pipeline comparison chart:

"The economic health of the U.S. can't be denied with unemployment falling to 5.5% this month, a six year low," says Kelley. "While there is heavy anticipation of how the Federal Reserve will address interest rates in June, strong investor confidence matched with even stronger company earnings has helped the markets remain resilient to volatility."