Global trend & subsector distribution
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.
Geographic IPO trends
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.
China's Review 2H 2015
China TMT IPO trend
Freeze on IPOs put in place in the third quarter by the Chinese Securities and Regulatory Commission was lifted in November. IPO activity gained pace in the fourth quarter of 2015 due to the return of China TMT IPOs which were virtually absent in the third quarter. In the second half of 2015, China reported 14 TMT IPOs garnering Rmb15.3 billion in proceeds.
The biggest IPO in the second half of 2015 was China Railway Signal & Communication Corp listed on Hong Kong Stock Exchange with proceeds of Rmb 8.7 billion.
China TMT IPO volume
In the second half year of 2015, 29% of the China TMT IPOs chose to get listed in the main board, while 29% chose Shenzhen GEM and 29% chose cross-border IPOs, only 13% chose Shenzhen SME.
Gross fund raised
In the second half of 2015, , there existed 4 cross-border IPOs for China TMT companies with Rmb 10.6 billion in proceeds, which comprised 69% of the overall amount raised, while main board of China had 4 IPOs with Rmb2.8 billion in proceeds, which comprised 18% of the overall amount raised. Shenzhen GEM had 4 IPOs with Rmb 1.5 billion in proceeds make up 10% of the overall amount raised, while Shenzhen SME had only 2 IPOs with Rmb0.6 billion in proceeds, which comprised 3% of the overall amount.