Global Technology IPO Review Q1 2013

Transcription

1 Global Technology IPO Review Q1 213

2 IPO summary Q1 213 Global Tech IPOs remain sluggish The global technology IPO market showed little strength in Q1 213 recording ten IPOs, just two more than Q4 212 and a 67% decline compared to Q Total funds raised of US$1.7bn were up 28% compared to Q4 212, but declined 43% year over year. Though Q1 213 did not deliver the level of activity seen in Q1 212 when 3 technology companies completed IPOs, six of the ten Q1 technology IPOs were completed in the last two weeks of March signaling improving sentiment. In the US, tech IPOs also led all industries in one-day average return topping 25 percent. China saw technology IPO activity decline throughout 212 due to slowing growth and change in posture by the Chinese Security and Regulatory commission relative to new filings. No technology IPOs were recorded for China in Q In contrast, the US recorded six IPOs, raising US$912mn, 53% of the total amount raised, but a 42% decline in terms of funds raised and 5% decline in number of deals year over year. Sharing the top five deals in terms of proceeds (75% of total Q1 proceeds) were the US, with two companies, and one each from Brazil, the UK and Japan. The Software subsector had the highest number of IPOs (4), raising US$652mn and representing 38% of the total money raised. IT Consulting & Services recorded one IPO that raised US$426mn (25% of the total). * Note: Issue size greater than US$4mn Source: Research 2

3 IPO summary Q1 213 (continued) Company Subsector Issue size (in US$mn) Primary exchange West Corp IT Consulting & Services 426 Nasdaq Hellermann Tyton Group PLC Communications Equipment 321 LSE Linx SA Software 231 Bovespa Broadleaf Co Ltd Software 211 Tokyo Marin Software Inc Software 15 NYSE Model N Inc Software 15 NYSE Xoom Corp Internet Software and Services 11 Nasdaq ExOne Computers & Peripherals 95 Nasdaq Silver Spring Networks Inc Communications Equipment 81 NYSE Wooree E & L Co Ltd Semiconductors 42 KOSDAQ Source: Thomson Reuters, Research 3

4 Q1 212 Q2 212 Q3 212 Q4 212 Q1 213 In US$ mn No. of IPOs Global IPO trends The global IPO market improved marginally in Q1 213 compared to the last quarter, led by rising market sentiments and better economic situations in both the US and Europe. The number of technology companies opting for IPO decreased by 67% YoY, but improved by 25% sequentially to ten. The total proceeds declined by 43% YoY, but showed a significant improvement of 28% QoQ, rising to US$1.7bn in the current quarter. Compared to the overall IPO market in the first quarter, however, technology companies were relatively subdued. A complete shutdown of IPOs in China negatively impacted the technology industry which witnessed almost 5% of IPOs originating from China from 21 through 212. Bar = proceeds in US$ mn Number of IPOs [yellow line] 2, 15, 4 3 Q Q Q Q , 2 Q , 1 Source: Thomson Reuters 4

5 Q1 212 Q2 212 Q3 212 Q4 212 Q1 213 Q1 212 Q2 212 Q3 212 Q4 212 Q1 213 In US$mn No. of IPOs In US$mn No. of IPOs Q1 212 Q2 212 Q3 212 Q4 212 Q1 213 In US$mn No. of IPOs Geographic IPO trends* China For the first time in three years, due to filing limitations instituted by the Chinese Security and Regulatory Commission, there were no technology IPOs of Chinese companies. 1,5 1, The number of US IPOs increased marginally to six, but recorded a dip of 5% YoY. In terms of deal value, US tech IPOs raised US$912mn, 16% lower sequentially and a drop of 42% YoY. Word on the street suggests reluctance on the part of issuers due to the hangover from the Facebook IPO. The total number of IPOs in Other countries witnessed a substantial improvement of over 1% both sequentially and YoY, to four IPOs. The total proceeds raised were US$85mn, a 344% increase sequentially. United States All other countries 2, 2 1,2 1 15, , , 5 2 * IPO is credited to the country where the company is headquartered and not the location of the exchange. Source: Thomson Reuters, Research 5

6 Region Asia-Pacific * Issue date (m/d/y) Company Subsector Proceeds (in US$ mn) Primary exchange Domicile nation Auditor Book runner(s) 3/12/213 Broadleaf Co Ltd Software 211 Tokyo Japan KPMG Nomura Securities 1/22/213 Wooree E & L Co Ltd Semiconductors 42 KOSDAQ South Korea Others Hyundai Securities Source: Thomson Reuters * Deals have been classified based on the exchange where capital was raised. 6

7 Region North America (Nasdaq, NYSE) * Issue date (m/d/y) Company Subsector Proceeds (in US$ mn) Primary exchange Domicile nation Auditor Book runner(s) 3/21/213 West Corp IT Consulting & Services 426 Nasdaq United States Deloitte Goldman Sachs, Morgan Stanley, Bank of America, Barclays, Citi Deutsche Bank, Wells Fargo Bank 3/21/213 Marin Software Inc Software 15 NYSE United States Goldman Sachs, Deutsche Bank, UBS Stifel Nicolaus 3/19/213 Model N Inc Software 15 NYSE United States JP Morgan, Deutsche Bank 3/12/213 Silver Spring Networks Inc Communications Equipment 81 NYSE United States EY Goldman Sachs, Credit Suisse 2/14/213 Xoom Corp Internet Software and Services 11 Nasdaq United States KPMG Barclays, Needham & Co 2/6/213 ExOne Computers & Peripherals 95 Nasdaq United States Others FBR-CAPITAL, BB&T, Stephens Source: Thomson Reuters * Deals have been classified based on the exchange where capital was raised. 7

8 Region Others (LSE, BOVESPA)* Issue date (m/d/y) Company Subsector Proceeds (in US$ mn) Primary exchange Domicile nation Auditor Book runner(s) 3/26/213 HellermannTyton Group PLC Communications Equipment 321 LSE United Kingdom Other JP Morgan, Goldman Sachs 2/6/213 Linx SA Software 231 Bovespa Brazil KPMG Credit Suisse, Morgan Stanley, Banco BTG Pactual, Banco Itau-BBA Source: Thomson Reuters * Deals have been classified based on the exchange where capital was raised. 8

9 Offering details Top 5 IPO description Rationa Company description West Corp The company intends to use the net proceeds from this offering and cash on hand to redeem 11% of senior subordinated notes due in 216, which have an outstanding principal amount of US$45mn. Issue size: US$426mn Country: United States Book runner: Goldman Sachs, Morgan Stanley, Bank of America, Barclays, Citi, Deutsche Bank, Wells Fargo. Industry: IT Consulting & Services Auditor: Deloitte HellermannTyton Group PLC Issue size: US$321mn Country: United Kingdom Book runner: JP Morgan, Goldman Sachs Industry: Communications Equipment Auditor: Other Linx SA Issue size: US$231mn Country: Brazil Book runner: Credit Suisse, Morgan Stanley, Banco BTG Pactual, Banco Itau-BBA SA" Industry: Software Auditor: KPMG The company intends to use the net proceeds as follows: To reduce leverage for general working capital purposes To provide capital for potential bolt-on acquisitions. The company intends to use the net proceeds as follows: Fund working capital Acquisitions and other general corporate purposes. West Corporation provides technology-driven communication services. Its Unified Communications segment offers conferencing and collaboration services, such as on-demand audio conferencing, video-managed and Web collaboration tools that allow clients to make presentations and share applications and documents over the Internet; and event services comprising audio and video Webcasting, virtual event design and hosting, operator-assisted audio conferencing and Web event services. The company has operations in the US, Canada, Europe, the Middle East, Asia Pac, and Latin America. West Corporation was founded in 1986 and is headquartered in Omaha, Nebraska. HellermannTyton Limited manufactures and supplies products for fastening, fixing, identifying and protecting cables. In addition, the company provides identification systems, including wire and cable markers, control panel labeling, industrial identification, security labeling, hazardous area identification and printers and software products. Further, it offers connectivity products, such as patch panels, data outlets, accessories, fiber, and cable products; thermal identification printing systems; and project management-auto-toolautomatic cable tying systems. The company is based in Manchester, United Kingdom. Linx SA engages in the supply of management software solutions for the Brazilian and international retail market. The company develops software programs in the retail and wholesale segments and provides technical assistance related to its commercial activity, consulting and courses. The company was founded in 1985 and is headquartered in São Paulo, Brazil. Source: IPO Prospectus, Capital IQ, Factiva 9

10 Offering details Top 5 (continued) IPO description Rationale Company description Broadleaf Co Ltd Issue size: US$211mn Country: Japan Book runner: Nomura Securities, Deutsche Bank Industry: Software Auditor: KPMG Marin Software Inc Issue size: US$15mn Country: United States Book runner: Goldman Sachs, Deutsche Bank, UBS, Stifel Nicolaus Industry: Software Auditor: The company intends to use the offering proceeds as follows: For "big data" utilization projects Capital investment and advertising. The company intends to use the offering proceeds in short-term, interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the US government. Broadleaf Co., Ltd engages in the development and sale of and supports various system packages for the automotive industry, including automobile maintenance system, administrative system packages for inventory control, customer control, estimate/sales/billing control, etc.; and for business databases for various non-automotive industries and business types. The company is also involved in various next-generation systems; Parts Station NET, a recyclable automobile parts shared inventory network; and Parts de.com, a Web-based automobile parts distribution system. It serves industries comprising automobiles, machinery and tools, agriculture-related, stationery and office equipment, residential engineering, mobile phones sales and IT-related companies, etc. The company was founded in 25 and is headquartered in Tokyo, Japan. Marin Software Incorporated operates a cloud-based digital advertising management platform. Its Revenue Acquisition Management platform offers integrated digital advertising management solutions for search, display, social media and mobile advertising. The company s platform consists of various modules, including Revenue Connect module that helps advertisers automate and streamline their ability to capture revenue data from a range of sources, such as ad servers, analytics systems, CRM platforms, and third-party databases and its Reporting and Analytics module that enables advertisers to report results. Marin Software Incorporated was founded in 26 and is headquartered in San Francisco, California. Source: IPO Prospectus, Capital IQ, Factiva 1

11 United States UK Brazil Japan South Korea In US$mn No. of IPOs Geographic distribution* In the current quarter, US led with six IPOs. US funds raised equaled a little over half of the total at US$912mn. West Corp was the biggest issue in terms of amount raised in US, with US$426mn. In terms of other countries, HellermannTyton Group PLC raised US$321mn in the UK and Linx SA raised US$231mn in Brazil. 1,5 Bar = proceeds in US$ mn 7 Number of IPOs [yellow line] United States 6 UK 1 Brazil Japan South Korea Total Source: Thomson Reuters * IPO is credited to the country where the company is headquartered and not the location of the exchange. 11

12 Software Communications Equipment Internet Software & Services Semiconductors IT Consulting & Services Computers & Peripherals In US$ mn No. of IPOs Sector distribution In terms of both the number of issues and money raised, the Software sector was the highest contributor to the overall IPO list with four IPOs that raised US$652mn, amounting to 38% of the total proceeds. The Communications Equipment sector had two IPOs this quarter, raising US$42mn and garnering 23% share of the total amount raised. In terms of issue size, IT Consulting & Services, with US$426mn, had a 25% share of proceeds, marginally higher than Communications Equipment. While IT Consulting & Services had only one IPO, West Corp, it was the single biggest technology IPO this quarter Bar = proceeds in US$ mn Number of IPOs [yellow line] Software 4 Communications Equipment 2 Internet Software & Services 1 Semiconductors 1 IT Consulting & Services 1 Computers & Peripherals Total 1 Source: Thomson Reuters 12

13 Nasdaq NYSE Others In US$ mn No. of IPOs Stock exchange distribution US exchanges remained the most active in terms of both the number of IPOs and the amount raised with six issues and proceeds of US$912mn. Both the NYSE and Nasdaq had three IPOs, with US$29mn and US$622mn respectively Bar = proceeds in US$ mn Number of IPOs [yellow line] Nasdaq 3 NYSE 3 Others Total Source: Thomson Reuters 13

14 Technology sector IPOs Q1 213 Key financials Figures in US$mn Company Subsector LTM revenue LTM EBITDA LTM net income Enterprise value (EV) Total debt Linx SA Software Marin Software Inc Software 6 (23) (27) 422 (21) Model N Inc Software 89 2 (6) 417 (7) Xoom Corp Internet Software and Services 87 (2) (5) 492 (111) West Corp IT Consulting & Services 2, ,673 2,936 Wooree E & L Co Ltd Semiconductors HellermannTyton Group PLC Communications Equipment Silver Spring Networks Inc Communications Equipment 197 (82) (9) 1,87 (18) ExOne Computers & Peripherals 29 (6) (12) LTM Last twelve months Source: Capital IQ Note: Financials were available for only 9 companies out of 1 which reported IPO this quarter.

15 (In US$ mn) Technology sector IPOs Q1 213 Key financial insights Technology sector and subsector average financials are as follows: Key financials 3,5 5, Net income status in Q1 213 technology IPO universe (9) 3, 2,5 2, 1,5 1, 5 4, 3, 2, 1, (in US$ mn) 56% 44% (5) Average Communications (all companies) Equipment Internet Software & Services IT Consulting & Services Semiconductors (1,) Software Computers & Peripherals LTM revenue LTM EBITDA LTM net income Total debt EV (right axis) Positive LTM net income Negative LTM net income On a LTM revenue basis, West Corp was the largest company to go public, followed by HellermannTyton Group, with revenues of US$2,259mn and US$647mn, respectively. The average revenue for all technology IPO companies this quarter was US$612mn. The average LTM EBITDA for IPO companies was US$98mn. The IT Consulting & Services subsector with only West Corp reported the highest LTM EBITDA of US$647mn. It was followed by Semiconductor subsector with a LTM EBITDA of US$41mn. The average debt levels were US$484mn, with the IT Consulting & Services subsectors reporting the highest LTM debt of US$2,936mn. The Communication Equipment subsector reported an average debt of US$98mn. The IPOs with highest Enterprise Value (EV) were West Corp, Silver Spring Networks Inc and HellermannTyton Group PLC with US$4,673mn, US$1,87mn and US$898mn, respectively. Four (44%) of the nine companies (for which financial data were available) that completed their IPOs in Q1 213 reported positive LTM net income, while the other four (56%) reported losses. 15 Note: Financials were available for only 8 companies out of 9 which reported IPO this quarter.

16 Technology sector IPOs Q1 213 Valuation metrics Company Subsector EV/LTM revenue EV/LTM EBITDA Linx SA Software 6.8x 31x Marin Software Inc Software 7.1x NM Model N Inc Software 4.7x 275.6x Xoom Corp Internet Software and Services 5.6x NM West Corp IT Consulting & Services 1.8x 7x Wooree E & L Co Ltd Semiconductors.5x 5.4x HellermannTyton Group PLC Communications Equipment 1.4x - Silver Spring Networks Inc Communications Equipment 5.5x NM ExOne Computers & Peripherals 2.3 NM Source: Capital IQ LTM Last twelve months NM Not meaningful Note: Financials were available for only 8 companies out of 9 which reported IPO this quarter.

17 Technology sector IPOs Q1 213 Key valuation insights Technology sector and subsector average multiples are as follows: Enterprise value multiple 175. x 35.x 15. x 3.x 125. x 25.x 1. x 2.x 75. x 15.x 5. x 1.x 25. x 5.x. x Average (all companies) Communications Equipment Internet Software & Services IT Consulting & Services Semiconductors Software Computers & Peripherals.x EV / LTM EBITDA EV / LTM Revenue (right axis) The average Technology sector EV/LTM revenue is 6.x, which is significantly lower when compared to the previous quarter. The Computer & Peripherals subsector reported the highest EV/LTM revenue of 2.3x, followed by Software with 6.2x, while the Semiconductor subsector had the lowest ratio of.5x. The Software sector had the highest EV/LTM EBIDTA ratio of 153.3x led by improved investor sentiment and lower EBITDA levels, while the Semiconductor subsector recorded the lowest ratio of 5.4x. The overall sector average was 79.8x. The Software sector recorded the highest EV/LTM EBITDA multiple and Computers & Peripherals had the highest EV/LTM revenue multiple. Subsector averages are relatively skewed as there are some subsectors with only one or two companies in this quarter s Technology IPOs. Note: Financials were available for only 8 companies out of 9 which reported an IPO this quarter. 17

18 Technology sector IPOs Q1 213 Management ownership * Figures in % Company Subsector VC / PE firms (<5% stake) Institutions Other institutions VC / PE firms (>5% stake) Individuals / Insiders Public and other Top 3 holders West Corp IT Consulting & Services Thomas H. Lee Partners, L.P.(43.27) Chartwell Investment Partners (.97) Sloma, Gregory T. (.1) HellermannTyton Group PLC Communications Equipment NA NA NA NA NA NA Silver Spring Networks Inc Communications Equipment Foundation Capital (26.32) Kleiner, Perkins, Caufield & Byers (11.57) Northgate Capital Group, L.L.C. (5.95) Xoom Corp Internet Software & Services Sequoia Capital (17.42) New Enterprise Associates (15.33) T. Rowe Price Group, Inc. (9.96) Exone Computers & Peripherals NA NA Rockwell, S. Kent (37.13) Irvin CPA, John (2.42) Wells Capital Management Inc (2.4) NA = Not available Source: Capital IQ * Ownership details provided for 8 companies available in Capital IQ. 18

19 Technology sector IPOs Q1 213 Management ownership (continued)* Figures in % Company Subsector VC / PE firms (<5% stake) Institutions Other institutions VC / PE firms (>5% stake) Individuals / Insiders Public and other Top 3 holders Broadleaf Co Ltd Software Linx SA Software Marin Software Inc Software Nissay Asset Management Corporation (1.28) Autobacs Seven Co., Ltd. (9.67) JPMorgan Asset Management Holdings Inc. (9.6) Intrag DTVM Ltd (14.8) Fernandes, Nércio José Monteiro (11.83) BNDES Participações S/A BNDESPAR (1.47) Crosspoint Venture Partners (16.9%) JBM 29 Irrevocable Trust (15.4%) Seagate Technology (9.2%) Model N Inc Software Benchmark Capital (12.53) DAG Ventures, LLC (12.3) Temasek Holdings (Private) Limited (8.18) Source: Capital IQ * Ownership details provided for 8 companies available in Capital IQ. 19

20 Lead investment bankers All Others 33.2% Goldman Sachs & Co 14% Barclays 6% Deutsche Bank Securities 9% Number of IPOs* Goldman Sachs & Co 1.39 JP Morgan 1. Nomura Securities 1. Hyundai Securities Co Ltd 1. Deutsche Bank Securities.9 Credit Suisse Group.75 Barclays.64 Hyundai Securities Co Ltd 1% Nomura Securities 1% JP Morgan 1% Credit Suisse Group 8% All others 3.32 Total 1 Source: Thomson Reuters * Fractional IPOs result from multiple lead banks on the same issue. 2

21 Lead auditors Other 22% Number of IPOs KPMG 3 2 Deloitte 1% 2% EY 1 Deloitte 1 Other 3 Total 1 KPMG 3% EY 1% Source: Thomson Reuters 21

22 Methodology The Global Technology IPO Review for Q1 213 is based on s analysis of transaction data extracted from Thomson Reuters and Capital IQ. The analysis considers IPOs across all countries worldwide from 1 Jan 213 to 31st March 213. Financial data was obtained from Capital IQ. The definition of the Technology sector is based on Thomson Reuters and Capital IQ database industry classifications and includes the following subsectors: - Internet Software & Services - IT Consulting & Services - Professional Services (e.g., Application Software, Software Solutions) - Semiconductors - Software - Computer Storage & Peripherals Computer, Computer Peripheral Equipment Computer Storage Device Manufacturing - Electronic Computer Manufacturing - Communications Equipment Only IPOs with issue size greater than US$4mn were included in the analysis. All monetary amounts are in US dollars unless otherwise indicated. LTM Last twelve months We exercised reasonable professional care and diligence in the collection, processing and reporting of this information. However, the data used is from third-party sources and has not independently verified, validated or audited the data. makes no representations or warranties with respect to the accuracy of the information, or whether it is suitable for the purposes to which it is put by users. 22

23 Technology industry leaders Raman Chitkara Global Technology Leader Phone: raman.chitkara@us.pwc.com Rod Dring Australia Werner Ballhaus Germany Yury Pukha Russia Phone: Phone: Phone: rod.dring@au.pwc.com werner.ballhaus@de.pwc.com yury.pukha@ru.pwc.com Estela Vieira Brazil Sanjay Dhawan India Greg Unsworth Singapore Phone: estela.vieira@br.pwc.com Phone: sanjay.,dhawan@in.pwc.com Phone: greg.unsworth@sg.pwc.com Christopher Dulny Canada Kenji Katsura Japan Douglas Mahony UAE Phone: christopher.dulny@ca.pwc.com Phone: kenji.katsura@jp.pwc.com Phone: douglas.mahony@ae.pwc.com JianBin Gao China Hoonsoo Yoon Korea Jass Sarai UK Phone: gao.jianbin@cn.pwc.com Phone: hoonsoo.yoon@kr.pwc.com Phone: jass.sarai@uk.pwc.com Xavier Cauchois France Ilja Linnemeijer The Netherlands Tom Archer US Phone: xavier.cauchois@fr.pwc.com Phone: ilja.linnemeijer@nl.pwc.com Phone: thomas.archer@us.pwc.com 23

24 For questions or comments, please contact: Raman Chitkara Global Technology Leader Phone: raman.chitkara@us.pwc.com Jan Akers Global Technology Marketing Phone: jan.m.akers@us.pwc.com This presentation is prepared by, KSDC Research & Analytics team. 24

25 213 PricewaterhouseCoopers LLP. All rights reserved. PricewaterhouseCoopers refers to PricewaterhouseCoopers LLP, a Delaware Ltd. liability partnership, or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate and independent legal entity.