Extreme volatility in the global capital markets slowed tech IPO activity in the third quarter. Eleven technology companies listed in the third quarter, with total proceeds of US$4.1 billion, compared to 18 listings in Q3 2014. However, excluding Alibaba’s IPO, Q3 2015 proceeds increased 37% year over year. On a sequential basis, the proceeds declined 34%.
“We've seen eight quarters of strong global technology IPO results, so a pause in activity is not surprising. However, the softness observed in the third quarter is no indication of a slowdown in the technology sector, where innovation and startup funding continues at a brisk pace. In the third quarter alone, nineteen startups from six countries joined the Unicorn club (US$1 billion or more valuation).”
– Raman Chitkara, Global Technology Industry Leader
Internet Software & Services recorded the highest IPO proceeds of US$1.6 billion (39% of the total proceeds). Compared to Q3 2014, it recorded a 50% decrease in the number of IPOs and a 52% increase in proceeds (excluding the blockbuster Alibaba IPO in Q3 2014).
Software recorded four IPOs, but lower average proceeds and fourth place in terms of total proceeds.
The Communications Equipment sector had one billion-dollar-plus IPO with US$1.4 billion in proceeds (35% of the quarters total proceeds).
Eleven IPOs were listed across six geographies, with total proceeds of US$4.1 billion in Q3 2015. In terms of proceeds, Asia led with six IPOs raising US$2.3 billion. However, the single largest IPO in the quarter was listed in Europe—Scout24 AG’s US$1.5 billion listing on the Frankfurt Stock Exchange.
In terms of number of IPOs, Japan led with three listings and total proceeds of US$759 million.
The US and China each had two IPOs. The decline in China was due to the suspension imposed by the China Securities Regulatory Committee (CSRC) in a move to support and increase liquidity in its secondary markets following a sharp decline in the Chinese capital markets. The US technology IPO market was subdued in the third quarter owing to a high degree of volatility in the global capital markets resulting from concerns about slowing economic growth in China and uncertainties around the Federal Reserve’s move to raise interest rates. With pre-IPO financings available at valuations previously experienced only in public capital markets, many start-ups are delaying their IPOs to allow them to expand and grow without the onerous scrutiny of the market on quarterly results.
“Japan had a buoyant IPO market this quarter with three IPOs and proceeds of US$759 million. The Bank of Japan's decision to continue its asset purchase program has increased economic momentum as has the awarding of the 2020 Olympics which is expected to increase inbound demand and improve Japan’s economy.”
– Masaru Koshida, Market & Solutions IPO Solution Group Leader, PwC Japan
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