Over the first half of 2016, the IPO markets have had to deal with volatility that makes it difficult to price new stocks, and more importantly, retain investors’ attention and money. The IPO drought has been severe, especially in the US where only 41 companies have made their public debuts, a serious drop compared to the 100 deals last year.

Our diversified sources of allocations and our presence in Asia compensated for the shortage in US IPOs, allowing us to participate in roughly the same number of deals compared to the same period last year (33 vs. 31 in H1 2015).

But the profit at mid year is substantially lower this year at +17.21% (+29.87% in H1 2015).  What normally would be considered to be an indecently high return YTD, when compared with the S&P and Nasdaq indexes, still somehow needs an explanation.

Let’s start by indicating that the average profit per allocation was almost the same for both years: +10.52% in H1 2016 and +10.65% in H1 2015.

What really changed is the size of the deals coming to the public markets, and consequently, the average size of our allocations were reduced by about 30%.

While last year we had a strong flow of bigger IPOs, like Shopify, Sunrise and Wizz Air, this year we had to also consider smaller allocations in unknown Japanese IPOs like Litalico, Global Group and Hatena.  Two of these latter deals, incidentally, brought us our highest returns ever (+200% and +90%)!

What’s in store for the second half of this year? Until the penultimate week of June, we were seeing our IPO pipeline steadily growing to 120 IPOs, compared to 90 last January.  And the Twilio (TWLO) moon shot (+68.40%) on Thursday, June 23, gave us the much awaited signal that the US tech IPOs were back.

However, the next day, Britain’s decision to leave the EU unleashed a crisis in the markets similar to the collapse of 2008.  Some IPOs, like Telefonica’s O2, were immediately postponed. A week later, fortunately, the Dow and the S&P were back in the black for 2016 and for Q2.

More importantly, even though there were 7 global IPOs in 2016 so far that raised 1bn USD (we were involved in 3 of them), we expect significantly more to come out of the woods. Just this month alone we have Line in New York and Tokyo, CDB Leasing and DFZQ on our July target list.

One last thing: our 2014 mid-year ROI was +16.97%, but we finished the year with a strong +40.51% total return. This is the same scenario we want to have repeated in 2016.