According to a second quarter report from PricewaterhouseCoopers LLP (PwC), the global technology IPO market showed steady improvement, and Canadians can start to expect a “steady stream” of technology IPOs.
The second quarter of 2013 saw 16 technology IPOs globally, raising US$2.8 billion compared to 10 IPOs in Q1 and just US$1.7 billion in proceeds. Compared to last year’s numbers at the same time, total funds declined by 84 percent, but that was from Facebook’s huge $16 billion IPO. Without Facebook, funds raised were up 59 percent.
Yet Canada showed just one IPO, from the $54 million IPO of Halogen Softwares, Inc. It was the first public company coming out of Ottawa since Mitel Networks launched three years ago for $147 million. It was the also Canada’s first IPO since
PwC Canada’s Chris Dulny said that because of recent lackluster returns, Canadian investors are looking for alternatives to their traditional natural resources sector for investments. With its strong performance over the last couple of years, the technology sector is a natural option.
“So, while Halogen Software marks the first major technology IPO since 2011, there’s reason to believe that it will be the first of a steady stream—good news for emerging technology entrepreneurs in Canada who, according to a recent PwC survey, don’t see IPO as a viable exit for their companies.”
The software subsector witnessed the highest number of IPOs for the second consecutive quarter. It recorded six IPOs with total proceeds of US$708 million, amounting to 25 percent of total proceeds. In terms of number of IPOs, the Internet Software & Services subsector followed Software with five IPOs that raised US$606 million.
PwC partner Raman Chitkara wrote that from a subsector perspective, “it’s no surprise that Software and Internet Software & Services dominated Q2 technology IPOs.” Those deals made up 70% of deal volume. “Demand for new software tools that enable cloud, social, mobile and data analytics can be expected to remain robust for the foreseeable future,” wrote Chitkara.
Of the 16 IPOs, 12 of them came from the United States. China, meanwhile, continued to show an absence of tech IPOs, for the second consecutive year. This comes despite the country’s stance as a dominant player in the market. But Chitkara wrote that China can expect to see a significant jump in both the volume of tech IPOs and the proceeds from them, if its Security and Regulatory commission will relax its posture on new filings at some point in the second half of the year.