Doug Chu is Senior Vice President and Head of the Silicon Valley Office and Western Region for NYSE Euronext’s...
Q1 2011 saw a strong environment for IPOs, fostered by the biggest first quarter market rally since 1998 with the S&P gaining nearly 6%. More proceeds were raised in the first quarter of 2011 than in any other first quarter since 2000 (excluding 2008 when Visa’s outsized $19B offering boosted the total raised proceeds). A closer look at the Q1 2011 IPOs reveals several trends.
First, 9 of the 27 IPOs (or 33%) in Q1, including one clean tech deal, were from the technology sector, representing the highest of any sector. These tended to price and perform more strongly than other sectors, with an average file / offer ratio of +10% vs the -10% average among non-tech IPOs, an average first day gain of 31% vs. 5% for non-tech stocks, and a current appreciation of 19% relative to 8% among non-tech stocks. 5 of the 9 tech deals (or 56%) were listed on NYSE, including the quarter’s largest tech deal, InterXion (NYSE:INXN), the highest price performer, Qihoo 360 (NYSE:QIHU) and the largest domestic internet IPO since Google, Demand Media (NYSE:DMD).
Second, venture-backed IPOs YTD were predominant, with the largest share of the overall deal flow since 2000. 14 of the 27 deals (52%) in Q1 were venture-backed. While the total number, 14, was less than Q4 2010 which saw 32, the overall share of IPOs was the greatest it has been since 2000.
Third, Q1 saw several record-setting private-equity-backed deals that comprised the majority (71%) of the proceeds raised in the quarter. These included the three largest private-equity backed IPOs in history: Nielsen Holdings (NYSE:NLSN), $1.9B in proceeds, Kinder Morgan, Inc (NYSE:KMI), $3.3B in proceeds, and HCA Holdings (NYSE:HCA), $4.4B in proceeds. The other two private equity deals were GNC Holdings and the private equity firm Apollo Global Management.
Finally, the backlog looks healthy. As of 4/15/11 there were 149 companies on file, which is up 25% from the same time last year. Similarly the dollar amount on file up 14% relative to the same time quarter last year. The technology backlog is strong as well, representing 25% of the total.
Included in this backlog are several notable technology companies have chosen to file with the NYSE including Freescale Semiconductor, the largest technology company LBO in history, Pandora Media, an internet radio provider, Fusion-io, a provider of a next generation storage memory platform, The Active Network, a provider of organization-based cloud computing applications, and Renren, who operates a social networking internet platform in China.
So far, Q2 2011 has continued the momentum of Q1 with 17 IPOs raising over $5B in proceeds.
For a more in-depth report on the Q1 IPOs, see here.