Overall, 2015 continued the trend set in 2014. It was the second best year for tech IPOs in five years in terms of amounts raised and number of listings. Ninety-two IPOs were listed with US$27.1 billion in proceeds, a decline of 22% in terms of listings and 47% in proceeds compared to 2014. Europe had its biggest year in a decade, delivering big-ticket (US$1 billion plus) IPOs and broad market participation. Three of the five big-ticket tech IPOs in 2015 were from Europe of which two were from the UK. In fact, the UK listed 45% of the European technology offerings.
The fourth quarter was the best quarter for the technology sector in terms of amount raised compared to the previous three quarters of 2015 and Q4 2014. The quarter reported 22 IPOs and proceeds of US$10.8 billion. Though the number of listings in the fourth quarter declined by 34% year on year, total proceeds increased by 45%. On a sequential basis, total proceeds increased by 163%, while the number of listings doubled.
Internet Software & Services retained its leadership position in 2015 with 40 IPOs and US$15.9 billion in proceeds. It contributed 59% of the total proceeds raised this year and 43% of the number of listings. The sector was boosted by four of the five 2015 US$1-billion-plus IPOs: Worldpay Group Plc, Auto Trader Group Plc, Scout24 AG, and First Data Corp.
The Software subsector listed 16 IPOs and raised US$3.6 billion. It contributed 13% in terms of total proceeds for the year and 17% in terms of number of IPOs. The sector did not have any billion-dollar-plus IPOs.
Computer Storage & Peripherals had 12 IPOs and raised US$3.0 billion. This subsector contributed 11% of total proceeds and 13% of total IPOs in 2015. Out of the 12 IPOs, seven were listed on the Asian stock exchanges riding on the strengths of China, Hong Kong, and Taiwan in this business.
Subsector distribution in the fourth quarter was more in line with the past trends. Internet Software & Services led the way with US$8.6 billion raised (80% of the total proceeds) and 13 IPOs (59% of the total number of IPOs). Six out of the top 10 IPOs, including the two biggest, were from this subsector. Worldpay Group Plc and First Data Corp raised US$3.8 billion and US$2.6 billion, respectively.
The Software subsector came second with 10% of the total proceeds and 18% of the IPOs listed.
The Computer Storage & Peripherals subsector was in third position with three IPOs raising US$623 million.
Technology IPOs were geographically well-distributed with 15 countries participating. In terms of proceeds, the US led with US$8.4 billion, followed by the UK with US$7.8 billion. This was somewhat a surprise entry by the UK into the second spot, replacing China, and though the US garnered the highest proceeds, average offering size (US$365 million) was significantly lower than both the UK and Germany (US$868 million and US$692, respectively), owing to the three US$1-billion-plus offerings listed by those countries.
The UK emerged as a force in the technology startup space with nine IPOs and US$7.8 billion in proceeds. A strong pipeline of companies that had been building over the past couple of years reached a level of maturity and stability suitable for public float.
China reported the highest number of offerings (30), but the amount raised at US$4.1 billion was much lower than other years. The decline in proceeds was due to the listing restrictions from regulators and negative macroeconomic data, which led to downward pressure on valuations as investors became more risk averse.
The US and China led the way with six IPOs each and the UK came second with five listings. However, in terms of proceeds raised, the UK topped with proceeds of US$4.8 billion, followed by the US at US$4.4 billion. Despite six listings, China raised just US$551 million due to weak macroeconomic factors and regulatory restrictions in the last two quarters.
“Despite continued market volatility and global economic concerns, the accelerating pace of technological change across all industries helped to buoy global technology IPO activity in the fourth quarter and led to the second best year since 2010. While we can expect to see fewer technology IPOs until volatility subsides, it’s too early to say whether 2016 will mean a pullback across the technology sector as a whole.”
– Raman Chitkara, Global Technology Industry Leader, PwC US
“Having two of the largest tech IPOs of the year demonstrates the strength and confidence in the UK technology market. Further, we see a healthy, growing pipeline in the UK and across Europe. Though markets have been volatile, the generally good performance of these companies post-IPO suggests we may see continued strength into 2016.”
– Jass Sarai, European Technology, Media and Telecom Industry Leader, PwC UK
“Market volatility notwithstanding, in 2015 proceeds from US technology IPOs increased to the highest total since 2012. Despite the general election and the US IPO market cooling in the first quarter, we still expect a number of technology companies to come to market in 2016.”
– Alan Jones, Deals Partner, PwC US
“High market uncertainty and a freeze on IPOs in July impacted tech IPO activity, but resumption in November and approval of launching the registration-based IPO system led to a strong finish to the year. However, one can expect there will be an adaptation period following the introduction of the new registration policies. That, coupled with persistent downward pressure on the broader economy, adds uncertainty to 2016 tech IPO performance.”
– Jianbin Gao, Technology Industry Leader, PwC China