20170420-普华永道咨询_深圳_-Global_Technology__IPO_Review_Full-_year_and_Q4_2016_63页_1mb

Global Technology IPO Review: Full-Year and Q4 2016

Core Content Overview

2016 was the slowest year for global technology IPOs in the past decade, marked by a significant decline in both the number of offerings and total proceeds. The year saw only 53 tech companies go public, raising a total of $8.7 billion in proceeds, representing a 42% drop in volume and a 68% drop in proceeds compared to 2015. Q4 2016 was the weakest quarter, with just nine tech IPOs, while Q3 was the strongest, with 20 offerings.

The tech IPO market experienced a rebound in the second half of 2016, with proceeds nearly tripling compared to the first half, though the average deal size remained at a seven-year low of $165 million. This was largely due to the absence of large-scale IPOs that were common in previous years. The market uncertainty, particularly around the US presidential election, and the global economic and geopolitical climate, including the Brexit referendum, played a key role in dampening IPO activity.

Despite these challenges, the European market showed resilience, with 10 tech IPOs (excluding the UK) contributing $3.7 billion in proceeds, including the largest offering of the year, Nets A/S from Denmark, which raised $2.4 billion. The UK, however, had no tech IPOs in 2016 due to uncertainty surrounding Brexit.

In the US, the IPO market saw 16 tech offerings, generating $1.8 billion in proceeds, down from $8.4 billion in 2015. The average deal size was $113 million, and the market remained cautious due to political uncertainty and volatility.

China, which had the most tech IPOs of any region in 2016 (18), raised only $1.4 billion in total proceeds, with an average of $80 million per offering. This marked a 40% decline in the number of IPOs and a 65% drop in proceeds from 2015. The Chinese government's decision to expedite IPO approvals in November 2016 is expected to boost activity in 2017.

Key Financials

• Total Global Tech IPOs in 2016: 53
• Total Proceeds: $8.7 billion
• Q4 2016 Tech IPOs: 9
• Q4 2016 Proceeds: $1.1 billion
• Average Proceeds (Full-Year 2016): $165 million
• Average Proceeds (Q4 2016): $122 million
• Largest Tech IPO of 2016: Nets A/S (Denmark), $2.4 billion
• Largest Tech IPO of Q4 2016: Trivago NV (Germany), $287 million
• Most Tech IPOs in 2016: China (18), United States (16)
• Proceeds by Region (Full-Year 2016):
  • Europe (Excluding UK): $3.7 billion
  • China: $1.4 billion
  • United States: $1.8 billion

Main Points and Trends

• Market Conditions: Macroeconomic and geopolitical instability, including the US election and Brexit, led to a decline in IPO activity.
• Subsector Performance: Internet Software & Services and Software subsectors dominated, with 32 IPOs raising $4.7 billion.
• Geographic Trends:
  • Europe (excluding UK) performed well, with 10 IPOs.
  • The UK had no tech IPOs due to Brexit uncertainty.
  • China had the most IPOs, but proceeds were low due to economic slowdown and regulatory actions.
  • The US market was subdued, with only 16 tech IPOs and $1.8 billion in proceeds.
• Cross-Border Activity: Remained stable at 15–17% of total tech IPOs.
• Valuation Concerns: Companies were hesitant to go public due to uncertain market conditions, high private valuations, and the preference for profitability over revenue growth.
• IPO Pipeline: Despite the low activity in 2016, there was a strong pipeline of potential tech IPOs, suggesting a likely resurgence in 2017.

Key Predictions and Outlook

• 2017 Outlook: The post-election market rally in the US is expected to improve the global tech IPO market.
• Investor Focus: Emphasis on profitability rather than revenue growth is anticipated, leading to more cautious valuations and better earnings quality.
• Regulatory Changes: China's CSRC expedited IPO approvals, which could lead to increased listings in 2017.
• Market Resilience: Mature companies with a proven track record were more likely to succeed in the IPO market, as they were better positioned to secure fair valuations.

Summary of Q4 2016 Tech IPOs

• Top 5 Listings:

  1. Trivago NV (Germany) – $287.2 million (Internet Software & Services)
  2. GDS Holdings Limited (China) – $192.5 million (IT Consulting & Services)
  3. BlackLine Inc (United States) – $146.2 million (Software)
  4. Coupa Software Incorporated (United States) – $133.2 million (Software)
  5. Bravura Solutions Limited (Australia) – $110.7 million (Software)

• Geographic Distribution:

  • US: 5 IPOs, $480 million in proceeds
  • China: 1 IPO, $193 million
  • Europe (Excluding UK): 2 IPOs, $287 million (Trivago NV) and $43 million (THQ Nordic AB)
  • Asia (Excluding China): 1 IPO, $111 million (Australia)

• Age of Companies:

  • 67% of Q4 2016 tech IPOs were more than 10 years old.
  • The oldest company was BlackLine Inc, founded in 2001.
  • Only one company (Ichor Holdings Ltd) was less than five years old.

Conclusion

2016 was a challenging year for the global tech IPO market, but there are strong indicators of a rebound in 2017. The market's recovery is expected to be driven by improved investor sentiment, regulatory changes in China, and a more favorable economic environment. Companies with a proven track record and stable financials are more likely to succeed in the IPO process, and the focus on profitability will likely lead to better market outcomes.