Led by two Unicorns, the global tech IPO market starts on an optimistic note in 2017
Number of global tech IPOs in Q1 2017
Proceeds from global tech IPOs in Q1 2017
Growth in volume from Q4 2016
Increase in proceeds from Q4 2016
Following a challenging previous quarter, Q1 2017 saw a flurry of activity in technology IPOs. Both deal volume and deal value increased significantly during the first three months of 2017 as 18 technology IPOs raised a total of US$5.8 billion. This was a phenomenal 234% sequential growth and 655% year-on-year growth in total proceeds, along with an 80% increase in the number of listings, sequentially and year on year.
Snap was the third-largest IPO in the last seven years (2010 through Q1 2017). Four of the top five IPOs were from the Internet Software & Services subsector. Snap is the largest listing since Alibaba in Q3 2014 and also the largest technology IPO in the five consecutive Q1 periods, 2013-2017. Internet Software & Services takes the lion’s share as most billion-dollar IPOs come from this subsector. Speed of reach and easier expansion support the lofty valuations that these companies command.
China, with 12 IPOs this quarter, emerged as a strong contender for technology IPOs, but did not beat its own record of 14 IPOs in Q2 2015. In Q1 2017, Chinese IPOs were the biggest contributor, driving solid growth in the Asia-Pacific region.
What is noticeable is the increasing participation of companies from mainland China, which is expected to grow further because of a backlog of companies waiting to be listed. The Chinese stock regulator CSRC is facilitating the IPO process for more companies with less intervention from the government. This has encouraged many Chinese companies to go public.
The US reported four tech IPOs with proceeds of US$4.5 billion. The lion’s share of the proceeds was due to Snap, which raised US$3.9 billion. Excluding Snap, the US tech IPO proceeds were US$580 million. Favorable market conditions and over 100 Unicorns in the US is encouraging and suggests more Unicorn IPOs in 2017.
"Overall, the outlook for the world economy is improving in 2017 ...The technology IPO market will likely cash in on this positive sentiment through the remainder of 2017."
"Geopolitical factors are inhibiting investments in Europe: the heightened political uncertainty due to the aftermath of Brexit and the ongoing elections in countries such as the Netherlands, France, Norway and Germany have brought instability."
“Along with the Consumer Service and Retail sectors, the Tech sector continued to drive a strong Japanese IPO market in Q1 2017. The Tech sector represented a quarter of the total Japanese IPOs in Q1 2017.”
"Consistent with our expectations, the number of Chinese Tech IPOs continues to grow as a result of the faster CSRC IPO approval process. Though the deal size of these tech IPOs tends to be relatively small, these companies cover a wide range of subsectors, including Semiconductors and Internet Software & Services. We anticipate the number of Chinese Tech IPOs will reach a historical high in 2017."
"After a slow start to the year, the US Technology IPO market accelerated into the close of the first quarter. 2016 Technology IPOs as an asset class richly rewarded investors with returns exceeding the S&P 500. This has continued into 2017 and we expect to see more technology companies and Unicorns enter the US public markets."
*Issue size greater than US$40 million (includes overallotment) and based on trade date