Global tech IPOs in 2016 dropped to their lowest level in the decade amidst macroeconomic and geopolitical turmoil, but a stream of high-profile companies in the pipeline, will likely create a resurgence in 2017*
Number of global tech IPOs in 2016
Proceeds from global tech IPOs in 2016
Decline in volume from 2015
Decline in proceeds from 2015
As measured by numbers of IPOs and total proceeds, 2016 was the slowest year of the decade for global tech IPOs, beating 2013 for this dubious distinction. It also matched the previous low for average proceeds, US$165 million, in 2010. IPOs declined 41% in volume and 65% in total proceeds from 2015 to 2016.
Europe, excluding the UK, was the best performing region in 2016, registering 10 IPOs with total proceeds of US$3.7 billion, a 16% increase over 2015.
Tech companies from eight European countries went public in 2016, including the largest tech IPO of the year from Denmark.
It was not a year for high-flying tech IPOs, with only two US$1 billion-plus offerings. This reduced average proceeds to a level not seen since 2010.
"Several factors suggest the 2017 global tech IPO market will be much better: the postelection stock market rally, the promise of US tax reform, general economic conditions, cyclicality of the tech IPO market and pent-up demand for public offerings."
"The European market proved to be notably strong in 2016, in spite of the migration crisis and the Brexit referendum. The expansionary monetary policy in place led investors to look for alternatives to the low interest rate environment. This was translated positively to the European capital market. With US$3,674 million in total proceeds, we experienced in Europe the largest volume of tech IPOs worldwide."
"After a one-year adjustment, China’s capital market gradually returned to its normal rhythm during the second half of 2016, although the proceeds of each IPO was generally small. In November 2016 the Chinese Regulatory Commission (CSRC) sped up the approval of IPOs, setting the stage for acceleration in the number of 2017 IPOs for Hong Kong and domestic markets."
"After a slow start to 2016, there was some rebound in both the number of tech IPOs and returns to investors, despite ongoing uncertainty about the economy and election. We anticipate improvement in market conditions given positive equity market returns. This momentum creates a window for tech companies to pursue a potential IPO. Buy side investors will demand a path to profitability, not simply revenue growth, to bring these companies to market in 2017."
*Issue size greater than US$40 million (includes overallotment) and based on trade date