The global technology IPO market began to look up in Q2 2016. The second quarter posted 40% sequential growth from 10 IPOs in Q1 to 14 IPOs, and a 92% increase in total proceeds from US$769 million in Q1 to US$1.48 billion. Year over year, Q2 2016 still saw a 61% decline from 36 IPOs and a 76% decline in total proceeds from US$6.16 billion in Q2 2015.
In light of the market performance in the first quarter--the worst since Q4 2012--and the Brexit referendum that adversely impacted the European and UK markets, the return of US tech IPOs and steady activity in Asia suggest a stronger second half ahead.
In Q2 2016, Software led the subsectors with six IPOs and US$660 million in proceeds. Internet Software & Services was second, with three IPOs and US$341 million raised. The biggest IPO for the quarter, Cotiviti Holdings Inc, belongs to the Software subsector.
These two subsectors cornered 68% of proceeds and 64% of the IPOs. Driven by digital innovation, the ability to scale globally in a short time and less capital requirements than hardware-dependent companies, these sub-sectors have consistently led the tech IPO market for the past several years.
In Q2 2016, the geographic distribution of technology IPO activity shifted back to the US and China, with five IPOs each, raising total proceeds of US$694 million and US$368 million, respectively. Other than the US and China, four countries--Australia, Sweden, Spain, and South Korea--had one IPO each. Asia topped with seven tech IPOs, followed by North America with five and Europe with two.
"The US displayed resilience. With capital markets largely stabilizing, technology IPOs have started to come back, though valuations remain challenged. We expect the tech IPO market to gain more traction in the second half of 2016."
-- Raman Chitkara, Global Technology Industry Leader, PwC
“Despite lingering uncertainty, the US showed a slight uptick in IPO activity following a slow first quarter. While we expect continued momentum in 2016, potential new issuers looking to capitalize on improving IPO market conditions will be carefully monitoring the outcome of the US presidential election, the Fed’s decision on interest rates and potential market moving IPOs.”
–- Alan Jones, Technology Deals Partner, PwC US
“Regulators held back listings in China, delaying registration clearances to control the rhythm of listings in order to maintain the stability of the capital market. Despite this, we had five technology IPOs in the second quarter.”
-– Jianbin Gao, Technology Industry Leader, PwC China
"DOUBLEUGAMES Co Ltd, the largest tech IPO of the last six quarters in South Korea, demonstrates that innovation and entrepreneurship are strong and growing. With three Unicorns and numerous other tech startups, we expect South Korea to continue to contribute to the global technology IPO market."
-- Hoonsoo Yoon, Technology Industry Leader, PwC South Korea