After a strong first half of 2011,initial public offering (IPO)proceeds in the third quarter of 2011 decreased from$11.9 billionin the second quarter of 2011 to$3.1 billionin the third quarter primarily attributable to high levels of market volatility and continued global macroeconomic challenges, according toIPO Watch,a quarterly and annual analysis of IPOs on U.S. stock exchanges byPwC US.

As ofSeptember 27, there were 20 IPOs with proceeds of$3.1 billionin the third quarter, compared with 34 IPOs raising$4.8 billionduring the third quarter of 2010 – a 35 percent decrease. Driven by continued momentum in activity from the second quarter 2011, July was the most active month of the third quarter with 15 pricings; however, activity dropped significantly in August concurrent with increased volatility in the markets. When market volatility spiked in the second week of August, 10 expected pricings were postponed and since then, there has been a slowdown in the number of scheduled offerings. The months of August and September combined saw only five companies come to market, below the monthly average of almost 14 witnessed year-to-date through July of this year.

There were six companies that withdrew IPOs during the third quarter after filing to go public earlier in 2011, of which three were reported as a result of the general market conditions while three occurred due to trade sales. According to PwC, the decision to postpone an IPO, rather than to formally withdraw from the registration process, displays a cautious optimism from potential issuers that the markets will regain the momentum that was exhibited earlier in 2011.

"While pricings are being challenged by short term market events, we are seeing that companies are still looking to an IPO as a long-term viable option for accessing the capital markets. Interim volatility has not displaced the robust number of companies that have entered the registration pipeline during the third quarter, which bodes well for the overall outlook of the U.S. IPO market," saidHenri Leveque, leader of PwC's U.S.Capital MarketsandAccounting AdvisoryPractice. "The robust pipeline provides a positive outlook for IPOs to continue, however, potential issuers are clearly considering the market conditions in evaluating the timing of their offering as evidenced by the increased postponements. Companies that have diligently prepared for an IPO, paired with having solid business fundamentals including strong financial performance and highly-skilled senior management, will help them to gain access to the capital that they need to execute growth strategies in the future as apublic company."

According to PwC, 74 new companies entered the IPO registration process during the third quarter, which was a slight increase compared to the same period in 2010 when 67 companies entered the registration process. When compared to the first half of 2011, 74 new filings in the third quarter is only slightly down from the 77 companies that filed registration statements in the second quarter, and still significantly more than the 52 companies that filed in the first quarter of this year. Of the 74 IPO filings, there were 25 companies that registered in August, at the peak of market volatility.

Technologycompanies dominated new entrants to the IPO pipeline in the third quarter, with 21 new companies entering the registration process, followed by financial services and industrials with 12 filings each, and 11 filings for energy companies.

"Despite a pullback in bringing IPOs to market during the third quarter 2011, market volatility and the impact of macroeconomic challenges, both domestically and inEurope, has not hampered companies' interest and preparation activities around executing future IPOs," said Leveque. "The consistent filing activity in the third quarter of 2011 provides optimism amidst a lackluster quarter in terms of pricing activity, as the pipeline remains primed for a strong showing in the fourth quarter of 2011 and into early 2012."

Total year-to-date IPO volume includes 101 pricings (as ofSeptember 27) - just shy of the 104 offerings seen in the same period for 2010. Total year-to-date IPO value has doubled, reaching$27.8 billioncompared to$14.2 billionraised during the first three quarters of 2010. The top five IPOs combined amount to$10.8 billion, or 39 percent of the year-to-date total proceeds.

According to PwC, there were nine financial sponsor-backed IPOs generating$1.8 billionin proceeds, or 57 percent of total IPO value for the third quarter. "Private equityplayers are still cautiously looking at the IPO market," continued PwC's Leveque. "Even with lingering market volatility, we expect financial sponsors to continue to lead the way for IPOs and build on their momentum from the first half, due in part to the expected continuation of exit strategies for their portfolio investments."