Corporate Financing Analysis - VC Floats To Continue Supporting US IPO Rally - 24 JULY 2017

Against the backdrop of an uptick in US IPO activity ( see BMI ' Market Leader ' , ' US IPO Momentum To Continue Accelerating In H217 ' , July 17 2017) we highlight that venture capital (VC) IPO activity throughout the US has been trending higher, with investors on the hunt for a greater return of high growth markets. In this vein, we highlight that VC public market listing activity doubled q-o-q in Q217 with the completion of 16 floats worth a combined USD1.8bn, a tally which equates to the highest volume of deals during a three-month window since back in Q415, when 18 deals successfully crossed the finishing line, tallying a combined USD2.1bn. Furthermore, deal volume in the second quarter of the year has doubled q-o-q from the eight deals recorded during Q117; however, at the same time, it has more than halved (those same eight deals tapped equity capital investors for a combined USD4.1bn during the three-month window ending in March).

As expected, the two hottest sectors in the VC arena so far this year have been the high tech and biotech sectors, with both industries helping drive the average VC aftermarket performance to an average return of 16% in the aftermarket. In fact, we note that only a handful of deals found themselves ending the second quarter with their heads under water. More specifically, the tech sector contributed nearly half (seven) of the 16 floats which completed during the second quarter, which represents a tally in line with the average volume of deals recorded during 2010. This septet of floats closed June outperforming the average and were up by 18% in the aftermarket, Renaissance Capital data shows. Furthermore, five of the seven debuted with a 20% pop or more.

Back On The Up
Quarterly US VC IPO Activity By Deal Value, USDbn
Source: Renaissance Capital

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