No Google? No problem.
The venture-backed, Mountain View, Calif.-based search giant still hasn’t graced the public markets with its anticipated multi-billion-dollar offering, but plenty of others companies have filled the void.
VC-backed IPO totals increased during the third and fourth quarters last year, but exploded during the first quarter of 2004. In all, 13 VC-backed offerings hit the NYSE or Nasdaq last quarter for a total take of more than $2.7 billion.
Not only does this figure surpass the entire VC-backed tally for 2003, but is also the highest quarterly total since the third quarter of 2000.
On the buyout front, 13 companies made it out, raising $2.83 billion, which maintains the stepped up pace that began late last year and which makes it clear that public exits are once again in vogue among private investors.
Meanwhile, another 33 VC-backed companies filed during the first quarter for an aggregate offering amount of over $3.45 billion, while 16 buyout-backed companies filed for an additional $4.29 billion in proposed proceeds. Leading the way among filings was Fairpoint Communications Inc., a Charlotte, N.C.-based portfolio company of Kelso & Co. , which filed to raise $750 million.
“This is validation that the venture industry is ready for some sort of return to normalcy,” says Jesse Reyes, vice president and director of research for Thomson Venture Economics (publisher of PE Week). “However, I’m not sure which is more influential in this surge – the abundance of companies ready to exit, or the fact that bankers feel the appetite for new IPOs.”
Perhaps it’s a combination of both, or simply the fact that such companies are regularly proving their ability to price offerings.
Most of the credit for this increase should go to Semiconductor Manufacturing International Corp. (SMIC), a Shanghai, China-based chipmaker that netted $1.8 billion in the largest IPO ever raised for a VC-backed company. In fact, SMIC is just the second VC-backed company to ever break the $1 billion IPO barrier, joining the July 2000 offering from networking company Corvis Corp.
As of market close last Thursday, SMI was trading at $15 per share, down from its $17.50 per share offering price on March 12 (see chart, page 11).
When SMIC closed on a $25 million round of VC funding in late 2002, it was given a post-money valuation of around $2.74 billion. Following its IPO, the company was worth over $6.64 billion. The company’s largest shareholders were, before the IPO, government entities, but it also counts Walden International, New Enterprise Associates and H&Q Asia Pacific as investors.
Also making positive waves in the first quarter was EyeTech Pharmaceuticals Inc., which priced a $136.5 million offering on Jan. 30. The company surged on its first day of trading, despite having no internally-developed products on the shelves and just one candidate in the clinic. That candidate, however, is a potential blockbuster that promises to treat a blindness-inducing disease prevalent among seniors and older diabetics.
EyeTech (one of seven VC-backed biotech companies to go public in the first quarter) ended trading last Thursday at $31.97, after having priced a $21 per share, which makes it the best-performing venture-backed IPO from the quarter. It received more than $165 million in VC funding from JPMorgan Partners, Alta Partners, Schroder Ventures, MPM Capital, and strategic partner Pfizer Inc.
The top five VC-backed IPOs are rounded out by Sunnyvale, Calif.-based Atheros Communications Inc. with $126 million, Nashville, Tenn.-based Symbion Inc. with $108 million, and China-based Linktone Ltd. with $85.96 million.
The quarter’s largest buyout-backed IPO came from TRW Automotive Holdings Corp. of Livonia, Mich., which originally filed to raise $350 million, with half of the proceeds being used to buy back shares from majority shareholder The Blackstone Group.
The company instead opted to up its ante, and priced 24.1 million shares at $28 per share, for a final IPO take of $675.86 million. The company was trading down 22% at $22.01 per share as of market close last Thursday.
Other large buyout-backed IPOs last quarter came from Kinetic Concepts Inc. with a $540 million offering, and Affordable Residential Communities Inc., with a $465.66 million offering.