Global Technology IPO Review Q3 2017

www.pwc.com Global Technology IPO Review Q3 2017 PwC | Global Technology IPO Review Q3 2017 2 Global tech IPO activity slows in spite of record high capital markets Raman Chitkara Partner and Global Technology Industry Leader PricewaterhouseCoopers LLP raman.chitkara@us.pwc.com *Issue size greater than US$40 million (includes overallotment) and based on trade date; See Methodology Welcome to the third quarter 2017 issue of PwC’s Global Technology IPO Review. With 20 tech IPOs and proceeds of US$5.2 billion, the third quarter saw a 31% drop in volume and a 15% decrease in proceeds from the prior quarter but an equal number of offerings and only marginally lower proceeds year over year (-3%). Even allowing for typical third quarter seasonality, however, the overall strength of the capital markets would have suggested a stronger showing. It is clear that poor aftermarket performance of several Unicorns that completed their IPOs earlier in the year did not foster an environment of higher risk taking and higher valuations, and this was especially true in the US. As a result, not only was there only one Unicorn IPO this quarter, it hailed from Argentina, not the US or China. However, activity did pick up in the last month of the third quarter with 13 of the 20 technology IPOs listing in September, setting a positive stage for an improved fourth quarter. Year to date there have been 67 tech IPOs raising US$17.1 billion − the best nine months since 2014 when 84 tech IPOs raised US$43.7 billion, a spike in proceeds due to the mega Alibaba IPO. Geographically, Asia accounted for 80% of the tech IPOs (16) in the third quarter, lending additional credence to the widely held notion that “the center of gravity of the tech world is slowly moving towards the East.” Greater China (China and Taiwan) continued its domination of tech IPOs with 11. It was followed by South Korea with three and Japan and India with one each. Europe posted the two largest tech IPOs of the quarter, but the UK was again absent as it continues to be challenged by transitional issues associated with the Brexit decision. Perhaps the biggest surprise of the quarter was just one tech IPO in the US. Consistent with past quarters, there was just one cross-border offering, Argentina’s Despegar.com, the sole Unicorn of the quarter that listed on the NYSE. In sharp contrast to preceding quarters, Internet Software & Services was number three this quarter raising US$616 million from three IPOs. Electronics led the way with nine IPOs, including the largest of the quarter, raising a combined US$3.6 billion. Software was second with four IPOs raising US$718 million. The macro environment remains positive for the IPO market owing to a robust pipeline and upbeat capital markets. With US and European elections behind us, and barring any unforeseen geopolitical turmoil, the tech IPO market is poised for a strong finish to the year. Sincerely, PwC | Global Technology IPO Review Q2 2017 Table of contents Q3 2017 Global tech IPO summary .......................................................................................................................................... 4 Country and stock exchange detail .......................................................................................................................................... 9 Key financials – Q3 2017 ......................................................................................................................................................... 16 Q3 2017 Technology IPO listings – Valuation metrics ......................................................................................................... 20 Top three subsectors in Q3 2017............................................................................................................................................. 22 Methodology ............................................................................................................................................................................ 43 For more information ............................................................................................................................................................. 44 PwC | Global Technology IPO Review Q3 2017 4 Q3 2017 Global tech IPO summary Lack of Unicorns and US tech IPOs dampen Q3 results, but improving activity at the close of the quarter sets the stage for a robust Q4 Following a positive first half of the year, Q3 2017 saw 20 IPOs with proceeds of US$5.2 billion. Those were declines of 31% and 15% respectively from the prior quarter but only a 3% decline in proceeds from Q3 2016. The two largest tech IPOs of Landis+Gyr Group, AG and Rovio Entertainment helped to raise average proceeds to US$261 million, higher than Q2 2017 at US$211 million, but slightly below Q3 2016 at $269 million. Tech IPOs picked up steam in the latter part of the quarter which suggests a stronger year-end. There we