2016 saw drop in IPOs but brighter outlook ahead

IPO
By Eleanor O'Neill, CA Today

10 February 2017

Just 53 technology companies completed an initial public offering (IPO) in 2016, the lowest figure of the decade, PwC reported.

The Global Technology IPO Report showed a 42% decline in the number of IPOs in the sector, despite a sizable rebound in the latter half of the year.

Global proceeds from technology IPOs almost tripled in the final six months of 2016 with 20 companies registering in the third quarter. However, the average offering value for the year still peaked at $165m (£131.4m), 68% less than in 2015 and the lowest level recorded since 2010.

The poor performance of the rest of the year was due in part to the lack of high profile IPOs, which were common in 2014 and 2015. The outlook for the next 12 months, on the other hand, is more favourable with companies like Cloudflare and Dropbox apparently gearing up to make the move.

Raman Chitkara, PwC Global Technology Industry Leader, said: “The combination of uncertain market conditions, high private valuations and ample cash caused many companies to wait until public markets offer a more favourable environment.

“Looking ahead, the market rally of the past few months bodes well for a healthier global tech IPO market in 2017.”

General economic conditions, cyclicality of the tech IPO market and pent-up demand for public offerings collectively suggest that the 2017 global tech IPO market will be much better.

The most prominent growth engine sub-sectors were in software and internet services with 32 offerings that raised a total of $4.7bn (£3.7bn). However, this is still less than previous years.

With the exception of the UK, Europe was the only region to avoid a decline in proceeds, largely thanks to digital payment service Nets A/S, which raised US$2.4 billion and was 2016's largest IPO. The continent had 10 IPOs in total, none of which were in the UK.

China took the lead in Asia with 18 IPOs at an aggregate value of $1.4bn (£1.1bn) while the US technology IPO market declined to its lowest level since 2010.

Cross-border political and economic issues influencing the volatility of major markets saw an emerging trend of companies choosing to list on their home exchanges.

Raman commented: "In addition to the post-election market rally in the US, the promise of US tax reform, general economic conditions, cyclicality of the tech IPO market and pent-up demand for public offerings collectively suggest that the 2017 global tech IPO market will be much better."

Topics

  • Technology
  • Business
  • Europe

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