Global Technology IPO Review: Q4 2014

Global Technology IPO Review: Full-year and Q4 2014

Global trends

Full-year 2014 results

Following a lackluster performance during 2011 through 2013, the global technology IPO market posted its best year of the decade in 2014 with the highest number of offerings (118) and highest proceeds (US$51.2bn).

Year over year, total proceeds jumped by 347% and the number of IPOs grew by 84%. During the period 2010-2014, total proceeds of US$119.6bn were raised from 447 deals -- 2014 alone contributed 43% of the proceeds and 26% of the deals. Strong capital markets, relatively low volatility during most of 2014, the reopening of the Chinese exchanges, and improvements in Europe all contributed to the strong performance.

In 2014 we also saw much broader global participation with 19 countries across 16 exchanges – this was also the highest for the period 2010-2014. Despite geopolitical incidents creating global market tensions, the technology IPO market showed resilience.

Global technology IPO trends
2014 Top 10 technology IPOs
 

Q4 results

The technology sector reported 34 IPOs in the fourth quarter. This was higher than all the quarters under study except for Q2 2014, which reported 40 IPOs. Total proceeds raised through these IPOs were US$7.5bn, which was lower than the last two quarters. The significant drop in amount raised (70%) compared to the last quarter was due to Alibaba‘s mega IPO in Q3 2014.

Year over year, the amount raised increased by 33% and the number of IPOs increased 36%. This quarter witnessed two billion-dollar IPOs - Rocket Internet AG (US$1.76bn) and Samsung SDS Co Ltd (US$1.06bn). The third biggest tech IPO this quarter was Lending Club Corporation with US$870mn.

It is expected the strength in Q4 will carry over to 2015.

Q4 2014 Global technology IPO trends Q4 2014 – Top technology IPOs
 

Subsector distribution

Full-year 2014

Internet Software & Services led the subsectors in 2014 with 47 deals raising US$33.5bn. It was the most active sector during the year, contributing 65% of the total proceeds and 40% of the total deals as compared to 43% of the proceeds and 38% of the deals in 2013. The sector was primarily boosted by Alibaba’s IPO which raised the highest proceeds in history. Excluding Alibaba, the subsector was still the highest in the group with proceeds of US$12bn.

Full-year 2014 subsector distribution  

Q4 results

In line with historical trends, Internet Software & Services led the way with 51% of the total proceeds and 29% of the total number of IPOs. Most of the big-ticket IPOs were from this sector and many were in the top 10.

Q4 2014 subsector distribution

Full-year 2014 results

Technology IPOs witnessed the broadest geographic participation of the last five years. Nineteen countries were represented in 2014 compared to 15 in 2010, 11 in 2011, just 6 in 2012, and 16 in 2013.

China’s re-emergence marked the biggest change in year-over-year activity. With 45 deals and proceeds worth US$29bn in 2014, China surpassed its 2013 figures fourfold (463%) in the number of issues (8) and by 28 times in proceeds (US$1bn). Until 2013, the best year for China in terms of proceeds and number of technology IPOs was 2010. The US was in second position in 2014 with 37 deals and proceeds worth US$7.9bn. Other notable participants were Japan and Israel with four IPOs each, the UK with seven listings, and South Korea with three IPOs in 2014.

Full-year 2014 geographic distribution Full-year 2014 regional distribution
 

Q4 results

China led the way with 11 IPOs. China was followed by the US with nine technology IPOs. But in terms of proceeds, US companies raised more than their Chinese counterparts, US$1.7bn versus US$1.4bn, and due to the smaller number of offerings, US companies received higher average proceeds.

European participation included Germany, with the largest tech IPO of the quarter - US$1.7bn, the Netherlands - US$188mn, also in the top 10 for the quarter, UK - US$133mn, and Norway - US$107mn.

Q4 2014 geographic distribution

Raman Chitkara

Global leader
Technology
+1 (408) 817 3746

Jianbin Gao

China and Hong Kong leader
Technology
+86 (21) 2323 3362

Jass Sarai

UK leader
Technology
+44 01895 52 2206

Alan Jones

US Technology Deals Partner
+1 (408) 667 0985

Werner Ballhaus

European leader Technology
+49 211 981 5848
 
 

Analysis & opinions

Technology IPO market insights
“The UK Tech market continues to produce good, credible IPO candidates and the pipeline remains strong. Further, the IPOs have been focused on retail, consumer and 'fintech', confirming that the UK is a leading tech country for consumer adoption of new technologies. ”

-- Jass Sarai, Technology Industry leader, PwC UK
Technology IPO market insights
"Although you probably have noticed a bit of volatility in the European market in 2014, we continue to see healthy investor interest as the economy recovers. This is especially true for the technology sector where a number of thriving startup centers, such as Berlin, have developed."

-- Werner Ballhaus, European Technology Industry Leader, PwC Germany
Technology IPO market insights
"The US technology IPO market continues to be a leader in both number and volume of listings led by e-commerce, SaaS and cloud-based technology offerings. Looking ahead into 2015, the IPO pipeline remains strong indicating significant growth opportunities and momentum."

-- Alan Jones, Deals Partner, PwC US
Technology IPO market insights
"Alibaba is a huge inspiration for Chinese technology companies to capture a higher market valuation. The large number of China tech IPOs in 2014 has also boosted the confidence of private equity investors and venture capitalists which led to healthy US dollar-denominated fundraising by technology companies in the Chinese market."

-- Jianbin Gao, Technology Industry Leader, PwC China
Technology IPO market insights
"What's impressive about 2014 results is not just that it was the best technology IPO market of the decade, but that there was such broad participation across the globe with 16 exchanges and companies from 19 countries. There is great excitement about the opportunities technology is bringing to all industries as is evident from the strong investor enthusiasm for IPOs of technology companies."

-- Raman Chitkara, Global Technology Industry Leader, PwC US
Technology IPO market insights
"The second half of 2014 was a very active period for IPOs in Australia. In particular, PE funds crystallised significant value from traditional businesses that they acquired several years ago through moving to new digital technology-based business models. This resulted in very successful IPOs in late 2014."

-- David Wiadrowski, Technology Industry Leader, PwC Australia