Market Volatility Drags Down Venture-Backed IPO Activity in Third Quarter
NEW YORK, NY – Ninety venture-backed M&A deals were reported in the third quarter, 20 of which had an aggregate deal value of $5.1 billion, increasing 39 percent compared to the second quarter and marking the strongest quarter for M&A exits with disclosed value this year, according to the Exit Poll Report by Thomson Reuters and the National Venture Capital Association (NVCA). Thirteen venture-backed initial public offerings (IPOs) raised $1.7 billion during the third quarter of 2015, a 55 percent decrease, by number of offerings, from the second quarter of this year and 54 percent decline in total amount of dollars raised during the previous three-month period.
“While the number of companies making a public offering during the third quarter was down as a result of market volatility, M&A activity was robust, marking the strongest quarter by disclosed deal value this year. Of the thirteen companies that did make an IPO, more than two-thirds are currently trading above their offering price in the middle of a choppy market, a strong indicator of the quality of venture-backed IPOs,” said Bobby Franklin, President and CEO of NVCA. “In addition to market volatility weighing down IPOs, another recent and important trend that has impacted the venture-backed IPO market is the increased activity of both VCs and non-traditional investors making late-stage investments into private companies that might otherwise file for an IPO. While these so-called ‘private IPOs’ are weighing down the current IPO market, it also means the venture-backed IPO pipeline is deep and we are hopeful exit activity picks up steam in future quarters.”
IPO Activity Overview
There were 13 venture-backed IPOs valued at $1.7 billion in the third quarter of 2015. By number of deals, quarterly volume decreased 55 percent from the second quarter of this year and registered a 54 percent decrease, by dollars, compared to the previous quarter.
Led by the biotechnology sectors, ten of the 12 offerings during the quarter were life sciences IPOs, representing more than three-quarters of the total listings in the third quarteBy location, 11 of the quarter’s 12 IPOs were from U.S.-based companies. In the only non-U.S. offering of the quarter, Austria-based Nabriva Therapeutics AG (NBRV) raised $92.3 million on the NASDAQ stock exchange on September 17th.
In the largest IPO of the quarter, Sunrun Inc (RUN), a San Francisco, California-based provider of solar energy, raised $250.6 million and began trading on the NASDAQ stock exchange on August 4th. The company is currently trading 26 percent below its $14 offering price.
Eleven companies listed on the NASDAQ stock exchange during the third quarter, while two listed on the New York Stock Exchange.
Nine of the 13 companies brought to market this quarter are currently trading at or above their offering price. There are 50 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 September 30th, 90 venture-backed M&A deals were reported for the third quarter of 2015, 20 of which had an aggregate deal value of $5.1 billion, a 42 percent uptick compared to the overall number of deals reported during the second quarter of this year, and a 39 percent increase, by disclosed deal value.
The information technology sector led the venture-backed M&A landscape with 69 of the 90 deals of the quarter and had a disclosed total dollar value of $3.4 billion. Within this sector, Computer Software and Services and Internet Specific deals accounted for the bulk of the targets with 47 and 17 transactions, respectively, across these sector subsets.
The largest venture-backed M&A transaction during the third quarter was EMC Corp’s $1.2 billion million purchase of Virtustream, a Bethesda, Maryland-based provider of enterprise cloud solutions. Infor Inc’s $675 million acquisition of Oakland, California-based Gt Nexus Inc ranked as the second largest venture-backed M&A deal during the quarter.