The U.S. initial public offering (IPO) pipeline was full and primed for companies to go public in fourth-quarter 2011, despite continued market swings and volatility, according to Ernst & Young. The firm’s update, reported during third-quarter 2011, found that technology and oil and gas companies combined accounted for 48% of the IPO registrations, and that when the market regains its footing, these sectors will likely dominate IPO activity. And, while the technology sector has the most IPOs in process, registrants in the oil and gas sector were expected to raise the most proceeds, with $7.9 billion, or 24%, of the total $32.5-billion filing proceeds.

Technology IPOs are typically backed by venture capital (VC) and private-equity (PE) funds. Both PE-backed and VC-backed IPOs in the third quarter increased 52% and 32% from the second quarter, to 85% and 58%, respectively. PE- and/or VC-sponsored deals made up 63% of U.S. new issuance, representing 12 deals and $2.3 billion of capital raised. The second-, third- and fourth-largest U.S. IPOs in third-quarter 2011were PE backed.

“It’s truly an investors’ market out there right now, 65 new com- panies joined the pipeline this quarter alone and the competition for capital is going to be stiff,” says Herb Engert, Americas strategic growth market leader for Ernst & Young. “It has never been so important for companies to be fully prepared to go public, as the IPO window closes just as quickly as it opens.”

Overall IPO momentum is slowing in the U.S., with average deal size down 58% and capital raised in the third quarter decreasing by 71.5% from second-quarter 2011. “IPO activity will pick up again. When it does, companies should be prepared to compete with the 181 other companies that are currently registered and in the pipeline,” says Jackie Kelley, Americas IPO leader for Ernst & Young.

“We want to roll out prepared investments, once the market recovers, to companies that have continued to raise capital during volatile markets, and have addressed potential issues in order to move swiftly when the market is right.”

While 65 new companies joined the pipeline, 11 registrants withdrew their offerings and 15 companies announced delays—the most withdrawals and delays in three years. Regionally, Texas continues to lead deal volume with 22 companies seeking $6.208 billion, followed by California with 38 companies seeking $5.074 billion.