Tech IPO Rebound

In 2012, we have seen the U.S. markets stabilize a great deal, with the VIX dropping below 20 for the first time since July 2011. This stabilization combined with a tech IPO backlog that has doubled in the past twelve months could set the stage for the strongest year in tech IPOs since the dot-com era. January and early Feb have already been active. Renewable Energy Group kicked off the year for clean-tech IPOs, pricing January 19th at $10/share. This clean-tech deal was followed by a run of tech IPOs including Guidewire Software, Greenway Medical Technologies, and AVG Technologies, with FX Alliance, EPAM Systems, Synacor, and Brightcove expected to price soon.

The insurance software provider Guidewire was the best performing of the recent deals, pricing above the range at $13/share and closing up 32% in its first day of trading. JP Morgan was the “lead left” bookrunner and did a great job getting our traditional tech year kicked off with a bang. Guidewire Software, an insurance focused company with a license model, was positioned against a core group of software providers such as Athenahealth, Concur, RealPage, Tangoe, Synchronoss, SciQuest, SPS Commerce, Tibco Software, Advent Software, Blackbaud, and DealerTrack. The equity story appears to have been sold well by management and the bankers as the offering was upsized from 7.5MM to 8.9MM shares (+18%), signaling strong institutional interest. Notably, Battery Ventures, one of the existing investors in Guidewire, indicated an interest in purchasing up to 5% of the deal at launch. That’s a positive signal that is relatively rare for IPOs.

In addition to the increase in tech pricings, January also provided some noteworthy tech filings, as Audience, Splunk, Infoblox, and Millennial Media all filed initial registration statements. The most talked about filing of the year was of course Facebook, which brought public access to its long-awaited financial statements and deal specifics. Facebook will dominate the headlines in 2012, but a robust tech IPO pipeline of over 55 companies is the important story to a successful tech year. Notable companies such as Yelp!, Avaya, Gogo, MobiTV, and Enova are all filed and we hope will price this year.

So, we started 2012 with a New Year’s resolution (or at least hope) that we’ll have a great year.  So far, so good, as the markets have cooperated.  If the U.S. markets remain stable, this healthy start should be a harbinger of continued success with Tech pricings in 2012.