Global technology IPOs set a new record at US$24.8bn in proceeds during Q3’14, increasing 105% from the prior quarter as a result of Alibaba, the largest IPO on record. Third-quarter IPO activity is typically slow due to the summer months which contributed to a sequential decline in technology IPOs from 40 in Q2’14 to 18 in Q3. On a year-over-year basis, Q3’14 IPO volume increased by 50%. Geographically, China dominated the technology IPO market with ten IPOs. Europe had four and the US had just two IPOs.
In the third quarter the Internet Software & Services and the Software subsectors garnered the most IPOs with six each, and proceeds of US$22.8bn and US$1.3bn, respectively. Excluding Alibaba’s US$21.8bn IPO (96% of the sector proceeds), the Internet Software & Services subsector raisedUS$1.0bn. These sectors remain at the forefront of investment activity as increased consumer demand in the developing economies along with increasing Internet penetration is resulting in the emergence of innovative new Internet and software dependent services.
Rising demand for wearables, smart devices and mobile solutions is also increasing the demand for specialized semiconductor components. The Semiconductor subsector had four Chinese IPOs which raised US$533mn compared to US$418mn in Q2’14, a 28% increase in proceeds quarter over quarter with the same number of deals. On a year-over-year basis, semiconductor deals increased 300% (one in Q3’13) and proceeds advanced 651% (US$71mn in Q3’13). All four semiconductor IPOs were Chinese companies, two listing on the Shanghai exchange and two listing on the Shenzhen exchange.
The geographic distribution of technology IPOs in Q3’14 was spread across six nations. China took the top spot with 10 deals (56%). Israel followed with three deals, the US posted two deals, and Australia, New Zealand and Luxembourg each had one deal. China also raised the highest proceeds at US$23.0bn (93%), followed by Israel with US$1.1bn (4%), and the US with US$524mn (2%).
In terms of Q3’14 average proceeds, China with US$2.3bn (skewed by Alibaba) was considerably higher than the US with average deal size of US$262mn. However, excluding Alibaba, average issue size was US$133mn in China. Israel raised US$350mn on average, followed by the remaining countries with one deal each raising an average of US$81mn in proceeds: Australia, New Zealand, and Luxembourg.
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