2014 could be a record year for Tech IPOs

Global Tech IPO trends

Continuing the momentum witnessed in Q4 2013 and a strong pipeline of technology companies, 2014 could surpass even pre-financial crisis global tech IPO activity, notes PwC. In its report titled: “Global Technology IPO Review-Q2 2014,” PwC notes that in contrast to the previous quarter, IPO activity was geographically broad-based.

2014 could be a record year for Tech IPOs

According to the PwC report, the technology sector surpassed expectations in the second quarter by logging 43 IPOs and $12.3 billion in proceeds, compared to 17 deals in Q2 2013, thus representing 153% growth. The total proceeds also grew by 327%, compared to Q2 2013. These trends are captured in the following graph:

Interestingly, during the first half of 2014, there were more tech IPOs completed and dollars raised than in all of 2013. The report highlights that Q2 2014 marked the strongest quarter for technology IPOs since 2008, excepting proceeds in Q2 2012 due to the Facebook Inc (NASDAQ:FB) IPO.

Geographically broad-based

The PwC report points out that as compared to the previous quarter, the IPO activity was geographically broad-based. For instance, four companies out of the top 10 were from the U.K., but one [Markit Ltd (NASDAQ:MRKT)] listed on the NASDAQ. The following table sets forth a Q2 2014 IPO summary of the top 10 deals:

Tech IPO Top 10 deals

According to the PwC report, the geographic distribution of tech IPOs in the second quarter of 2014 was spread across 10 nations, with the U.S., China and the U.K. leading the way. This trend is captured in the following table:

Tech IPO geographic distribution

The report notes that U.S. exchanges posted 63% of the global tech IPO activity with 27 IPOs and $8.5billion in proceeds. Interestingly, the increase in deal value is attributed in part to two major cross-border IPOs: China’s JD.Com Inc (ADR) (NASDAQ:JD), and UK’s Markit Ltd (NASDAQ:MRKT).

Tech IPO by region-NA

The PwC report explains that while there were only five tech IPOs on Chinese exchanges, owing to the preference of Chinese companies to take advantage of the strength in the U.S. capital markets and list on the NYSE and the NASDAQ, total Chinese IPOs increased from 11 in the first quarter to 14 in the second quarter.

Taking a closer look at the sub-sector distribution, the report points out that Internet Software and Services led activity with 21 deals and $5.2 billion raised. The PwC report notes that with unique internet commerce models continuing to emerge across Asia, companies look to tap this huge customer base.

Tech IPO subsector distribution

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About the Author

Mani is a Senior Financial Consultant. He has worked in Senior Management role in large banking, financial and information technology organizations. He has provided solutions for major banking and securities firms across the globe in the area of retail, corporate and investment banking. He holds MBA (Finance) and Professional Management Accounting Qualifications. His hobbies are tracking global financial developments and watching sports

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