The IPO Streak Continues in 2014

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Twenty-eight venture-backed initial public offerings (IPOs) raised $4.9 billion during the second quarter of 2014, a 45 percent increase, by dollars raised, compared to the previous quarter, according to the Exit Poll report by Thomson Reuters and the National Venture Capital Association (NVCA). The second quarter marked the fifth consecutive quarter to see 20 or more venture-backed IPOs but below the strong performance of the first quarter, which marked the strongest three-month period for new listings since the third quarter of 2000.


For the second quarter of 2014, 97 venture-backed M&A deals were reported, 33 of which had an aggregate deal value of $3.3 billion.  This represents a 56 percent decrease in disclosed value from the first quarter of this year. Average deal size during the second quarter totaled $98.6 million, the lowest average deal size since the first quarter of 2013.

“With the various stock indices continuing to reach new heights, the environment for IPOs remains quite favorable—welcome news for venture-backed companies that have been waiting for the opportunity to go public for several years now,” said Bobby Franklin, President and CEO of NVCA.  “Led by the biotechnology sector, life sciences companies appear to be the primary beneficiaries from the favorable IPO environment, with more than half of the offerings during the quarter coming from life sciences companies, marking the fifth consecutive quarter for double digit listings.  It’s good to see continued investor interest in venture-backed companies, especially with there being such a backlog of great companies wanting to go public.”

Quarter/Year

Total  M&A Deals

M&A Deals with Disclosed Values

*Total Disclosed M&A Value ($M)

*Average M&A Deal Size   ($M)

**Number of IPO’s

Total Offer  Amount ($M)

Average IPO Offer Amount ($M)

2009

360

109

12,364.9

113.4

13

1,979.8

152.3

2010-1

149

36

4,945.1

137.4

8

921.9

115.2

2010-2

109

30

2,681.4

89.4

18

1,548.4

86.0

2010-3

142

36

4,140.9

115.0

16

1,852.6

115.8

2010-4

145

48

5,939.8

123.7

24

3,086.6

128.6

2010

545

150

17,707.3

118.0

66

7,409.5

112.3

2011-1

139

51

5,966.8

117.0

14

1,526.9

109.1

2011-2

94

37

6,202.3

167.6

20

5,635.1

281.8

2011-3

142

43

6,934.5

161.3

5

475.9

95.2

2011-4

123

38

4,989.6

131.3

11

2,803.2

254.8

2011

498

169

24,093.2

142.6

50

10,441.1

208.8

2012-1

114

28

3,671.0

131.1

19

1,682.8

88.6

2012-2

124

34

6,304.4

185.4

12

17,227.9

1,435.7

2012-3

124

38

8,687.6

228.6

10

1,140.7

114.1

2012-4

127

32

4,031.1

126.0

8

1,408.4

176.1

2012

489

132

22,694.2

171.9

49

21,459.9

438.0

2013-1

86

11

1,019.3

92.7

8

716.9

89.6

2013-2

96

20

4,371.3

218.6

22

2,249.9

102.3

2013-3

115

30

4,856.7

161.9

27

2,781.4

103.0

2013-4

94

35

6,665.4

190.4

24

5,320.1

221.7

2013

391

96

16,912.7

176.2

81

11,068.2

136.6

2014-1

111

30

7,552.4

251.7

37

3,400.1

91.9

2014-2

97

33

3,254.0

98.6

28

4,926.4

175.9

2014

208

63

10,806.4

350.3

65

8,330.9

267.9

Source: Thomson Reuters & National Venture Capital Association

IPO Activity Overview

There were 28 venture-backed IPOs valued at $4.9 billion in the second quarter of 2014.  By number of deals, quarterly volume decreased 24 percent from the first quarter of this year but registered a 45 percent increase, by dollars, compared to the previous quarter.

Led by the biotechnology sector, 16 of the 28 offerings during the quarter were life sciences IPOs, representing over half of the total number of offerings during the second quarter. This marks the fifth consecutive quarter for double-digit listings in the life sciences sector.

By location, 22 of the quarter’s 28 IPOs were from U.S.-based companies.  Four venture-backed IPOs were from companies based in China, raising a combined $2.4 billion. Quotient Ltd (QTNT), a United Kingdom-based biotechnology company, raised $40 million on the NASDAQ stock exchange on April 24th.

In the largest IPO of the quarter, JD.com a China-based online shopping company, raised $2.0 billion and began trading on the NASDAQ stock exchange on May 21st.  The company is currently trading 50 percent above its $19 offering price.

Q2 2014

                               Industry

*Number of Venture-Backed IPO’s in the U.S.

Total Venture-Backed Offering Size ($M)

Information Technology

Internet Specific

4

2,468.1

Computer Software and Services

6

641.5

Life Sciences

10

3,109.6

Biotechnology

12

876.3

Medical/Health

4

366.8

Non-High Technology

16

1,243.1

Consumer Related

1

491.3

Industrial/Energy

1

82.5

2

573.8

TOTAL

28

4,926.4

Source: Thomson Reuters & National Venture Capital Association

*Includes all companies with at least one U.S. VC investor that trade on U.S. exchanges, regardless of domicile

Twenty-two companies listed on the NASDAQ stock exchange during the quarter, while six companies listed on the New York Stock Exchange.  All of this quarter’s 12 biotechnology IPOs listed on the NASDAQ stock exchange.

Twenty-one of the 28 companies brought to market this quarter are currently trading at or above their offering price.  There are 51 venture-backed companies currently filed publicly for IPO with the SEC. This figure does not include confidential registrations filed under the JOBS Act, where many observers believe the majority of venture-backed companies now file.

Mergers and Acquisitions Overview

As of June 30th, 97 venture-backed M&A deals were reported for the second quarter of 2014, 33 of which had an aggregate deal value of $3.3 billion, the slowest quarter by disclosed deal value since the first quarter of 2013.  The average disclosed deal value was $98.6 million, a marked decline since the first quarter of 2014.

The information technology sector led the venture-backed M&A landscape with 79 of the 96 deals of the quarter and had a disclosed total dollar value of $1.7 billion. Within this sector, computer software and services and internet specific deals accounted for the bulk of the targets with 39 and 29 transactions, respectively, across these sector subsets.

Q2 2014

                               Industry

Number of Venture- Backed M&A deals

Number of  Venture- Backed M&A  deals with a disclosed value

Total Disclosed Venture- Backed  Deal Value ($M)

Information Technology

Computer Software and Services

39

10

1,148.8

Internet Specific

29

10

478.1

Computer Hardware

4

1

85.0

Communications and Media

5

Semiconductors/Other Elect.

2

79

21

1,711.9