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Venture-Backed IPO Exits Strengthen in 2007

Venture-Backed IPO Exits Strengthen in 2007

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Published by: i-people on Mar 31, 2008
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05/08/2014

 
 Emily Mendell, NVCA, 610-565-3904, emendell@nvca.orgMatthew Toole, Thomson Financial, 646-822-7560, matthew.toole@thomson.comSandy Anglin, Thomson Financial, 646-822-7334, sandy.anglin@thomson.com
Venture-Backed IPO Exits Strengthen in 2007
Venture-Backed Acquisition Quarterly Volume Hits 10 Year Low While Average Disclosed ValueHits 7 Year HighNew York, NY- January 2, 2008
– Thirty-one venture-backed initial public offerings totaling $3.0 billionin proceeds were issued in the fourth quarter of 2007, according to the Exit Poll report by ThomsonFinancial and the National Venture Capital Association (NVCA). This volume represents the highestquarterly number of IPO’s since the third quarter of 2000. For the year, 86 venture-backed companies wentpublic for $10.3 billion, a 51 percent increase in volume over 2006 when 57 companies went public for$5.1 billion. In contrast, the venture-backed M&A market had only 46 deals in the fourth quarter, 23 owhich had a combined disclosed value totaling $6.7 billion, the lowest number of total M&A exits since 1Q1998 when there were 44 M&A exits. For the year, there were 305 venture-backed M&A transactions witha total disclosed value of $25.4 billion, the highest disclosed values since 2000.“This past year was marked by improving quality of both venture-backed IPO’s and M&A transactions,”said Mark Heesen, president of the NVCA. “In the coming year, we would like to uphold that qualitywhile increasing quantity on both exit fronts. An ideal year would see more than one hundred venture-backed IPO’s and 350 or more acquisitions. But we don’t want to sacrifice quality to hit that threshold.”
Venture-Backed Liquidity Events by Year/Quarter, 2001-2007ytd
Quarter/YearTotalM&ADealsM&ADeals withDisclosedValues*TotalDisclosedM&AValue($M)*AverageM&ADeal Size($M)**Numberof IPO'sTotalOfferAmount($M)AverageIPO OfferAmount($M)2001 353 165 16,798.9 101.8 41 3,489.9 85.12002 318 152 7,916.4 52.1 22 2,109.1 95.92003 291 123 7,726.1 62.8 29 2,022.7 69.82004-1
80 45 3,921.0 87.1 13 2,721.1 209.3
2004-2
89 48 4,514.6 94.1 29 2,077.8 71.7
2004-3
86 47 4,142.8 88.2 24 3,225.6 134.4
2004-4
84 46 2,862.2 62.2 27 2,990.4 110.8
2004 339 186 15,440.6 83.0 93 11,014.9 118.42005-1
82 46 4,364.9 94.9 10 720.7 72.1
2005-2
80 36 4,791.0 133.1 10 714.1 71.4
2005-3
98 47 4,374.8 93.1 19 1,458.1 76.7
2005-4
87 39 2,563.7 65.7 17 1,568.1 92.2
2005 347 168 16,094.4 95.8 56 4,461.0 79.72006-1
105 49 5,446.4 111.2 10 540.8 54.1
2006-2
104 39 3,935.6 100.9 19 2,011.0 105.8
2006-3
93 42 3,894.8 92.7 8 934.2 116.8
2006-4
61 25 3,866.8 154.7 20 1,631.1 81.6
2006 363 155 17,143.5 110.6 57 5,117.1 89.8
 
2007-1
82 29 4,540.3 156.6 18 2,190.6 121.7
2007-2
82 34 3,876.8 114.0 25 4,146.8 165.9
2007-3
95 50 10,300.5 206.0 12 945.2 78.8
2007-4
46 23 6,675.6 290.2 31 3,043.8 98.2
2007 305 136 25,393.3 186.7 86 10,326.3 120.1
Thomson Financial & National Venture Capital Association*Only accounts for deals with disclosed values**Includes all companies with at least one U.S. VC investor that trade on U.S. exchanges, regardless of domicile.
IPO Activity Overview
The Information Technology (IT) sector saw the majority of venture-backed companies come to the publicmarket with 17 IPO’s raising $1.5 billion during the fourth quarter. This activity represents an increasefrom the previous quarter when there were nine issues in the IT sector accounting for $684.5 million inproceeds. The largest IPO in the IT sector in the fourth quarter was Longtop Financial Technologies, Ltd.’s$182.6 million issue, managed by Goldman Sachs and Deutsche Bank. Longtop Financial Technologies,Ltd. is a software and solutions developer catering to the IT needs of rapidly developing financialinstitutions in China. Venture investment in the company totaled $48.2 million from Tiger Global and anundisclosed firm across two rounds.The Life Sciences industry accounted for an additional ten venture-backed IPO’s during the fourth quarterof 2007. The largest issue in this sector was the $98.0 million issue by Nanosphere, Inc., an Illinois basedcompany whose Verigene System automates the analysis and ultra-sensitive detection of nucleic acids andproteins. Venture investors in the company include Allen & Company, Bain Capital, BrooksideInternational Incorporated, Lurie Investment Fund, NGEN Partners LLC, and undisclosed individuals andinvestors. In total, these firms invested $80.1 million of venture capital in Nanosphere.In full-year 2007, the IT sector accounted for the most venture-backed IPO’s, totaling 47 issues and $6.0billion in volume. Life Sciences followed with 32 issues and $2.6 billion in proceeds.
Venture-Backed IPO Industry BreakdownQ4 2007
Industry*Numberof Venture-BackedIPO’s inthe U.S.TotalVenture-BackedOfferingSize ($M)
Internet Specific 4 291.2Communications and Media 2 134.7Computer Software andServices7 836.9Semiconductors/Other Elect. 4 246.8
InformationTechnologyTOTAL 17 1,509.7
Medical/Health 6 342.9Biotechnology 4 320.5
Life SciencesTOTAL 10 663.4
Consumer Related 2 487.8Other Products 2 383.0
Non High-TechnologyTOTAL 4 870.8TOTAL 31 3043.8
*Includes all companies with at least one U.S. VC investor that trade on U.S.exchanges, regardless of domicile
 
 The Boston metropolitan region, followed by San Jose and Chicago, had the most venture-backedcompanies with IPO exits in the fourth quarter. In Boston, there was one IPO apiece in Communicationsand Media, Computer Software and Services, Semiconductors and Other Electric, and Biotechnologyindustries. In San Jose, there was one issue each in Computer Software and Services, Biotechnology, andMedical/Health sectors. Chicago, had offerings in Communications and Media, Semiconductors and OtherElectric, and Biotechnology.Foreign IPO’s on US exchanges accounted for $933.0 million in proceeds in the fourth quarter, the highestproceeds since 1Q 2004 when two issues, led by the largest venture capital issue ever, SemiconductorManufacturing International Corporation, raised $1.9 billion. The largest issue by proceeds of the quarterwas by Chinese company China Nepstar Chain Drugstore, Ltd., a retail drugstore chain in China, whichraised $334.1 million on the NYSE. GS Capital Partners, L.P. was the sole investor in this company.For the full-year 2007, San Jose led the metro regions with 19 issues and $2.0 billion in funds raised byventure-backed companies which went public in 2007. The region accounted for 21.5% of the annual valueof funds raised by companies in the US marketplace. Boston followed with 17 issues and $1.3 billion involume.
4Q 2007 Venture-Backed IPO Metro RegionBreakdown
Metro Region*Number of Venture-BackedIPO's in the U.S.
Boston 4San Jose 4Chicago 3Twin Cities 3San Fran/Berkeley 2Washington Metroplex 2San Diego Metro 2Philadelphia 1Great Lakes 1Los Angeles 1Other US 3Non US 5
TOTAL 31
*Includes all companies with at least one U.S.VC investor that trade on U.S. exchanges,regardless of domicile
As of December 31, 2007, 58 percent of the venture-backed companies that went public during 2007 weretrading at or above their offering price
.
Sixty venture-backed companies have filed for an initial public offering with the SEC since 2006 and arecurrently “in registration.” This marks a decrease from the previous quarter when 72 venture-backedcompanies were in registration.In addition to the U.S. market activity, ten companies that received US venture financing went public onforeign exchanges in the fourth quarter. Exchanges for these listings includes Bombay, Euronext Brussels,Hong Kong, London AIM, Madrid, National, Singapore, and Taiwan.The largest IPO of the year was MetroPCS Communication Inc’s $1.2 billion issue in April, the thirdlargest issue of all time.
 

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