THE DEAL PIPELINE: HOT IPO MARKET SHOWS NO SIGNS OF ABATING IN 2014
BY TAINA ROSA
The already hot IPO market is expected to continue its winning streak this year, providing an exit venue for private equity-backed companies.
So far this year, 23 private equity-backed companies have gone public globally, the highest year-to-date number of offerings ever, according to data provider Dealogic. Total valuation for public debuts this year so far came in at slightly more than $7 billion. In the same period in 2013, about 10 private equity-backed companies went public, raising a little more than $3 billion.
And judging by the number of IPOs that are on deck, the trend is not about to lose steam.
On Tuesday, Apax Partners LP-backed King Digital Entertainment plc, the maker of the Candy Crush Saga game, filed to raise up to $500 million in a public offering. The company plans to list on the New York Stock Exchange under the KING ticker symbol.
That same day, Danish facilities services group ISS A/S, which counts private equity shops EQT Partners AB and Goldman Sachs Capital Partners among its shareholders, announced plans to raise about 8 billion kroner ($1.47 billion) in an IPO on the Nasdaq OMX Copenhagen stock exchange.
On Wednesday, Kohlberg Kravis Roberts & Co.'s Pets at Home Group plc, a 369-store pet store chain in the U.K., said it plans to list at least 25% of itself and raise £275 million ($459 million) via the London Stock Exchange.
While the continued surge in IPOs is a global trend, the Americas region is expected to see the most activity, according to a report by Thomson Reuters and Freeman Consulting Services.
And in the U.S. at least, IPOs are expected most from the technology sector.
In the Fourth Annual IPO Survey of U.S. transaction attorneys by consulting firm KCSA Strategic Communications, 44% of respondents said the technology industry would see the most IPOs in 2014, followed by healthcare (29%), financial services (15%), energy (8%) and retail (4%).
Separately, in a survey of technology company CFOs conducted by advisory firm BDO USA LLP, 93% of respondents anticipated IPO activity in the sector will remain the same or increase in 2014 as compared to 2013, up from 86% of CFOs who expressed the same sentiments last year.
Moreover, 43% of the CFOs surveyed said they expect private equity to generate the most tech IPOs. Following private equity, 39% said venture capital-backed companies will be the most likely to go public, and 18% identified owner/manager or other privately held businesses as giving rise to the most IPOs.
Aftab Jamil, partner and leader of the technology and life sciences practice at BDO USA, said in a statement that "while some industry analysts are concerned that the IPO market has already hit its peak, our study indicates that technology companies anticipate that there is more to come in 2014 as business growth prospects remain strong and investor demand increases.
"This could be a reflection of the equity market, which remains generally strong, and the overall improvement of the economic environment," Jamil said. "Excitement generated by the robust equity market and the broader IPO market has also seeped into the market for private tech companies."