This year, the IPO market hit a six-year low after 2014 marked a 14-year high.
Assuming that Yirendai (YRD) is able to successfully price its deal next week, the 2015 IPO market will have seen a total of 170 IPOs raising $30.1 billion. This represents a 38% drop in total deals and a 65% drop in total proceeds from 2014, when 275 companies raised $85.3 billion. In a down year, the tech sector has been one of the biggest disappointments, but the year is ending on a high note with the Atlassian IPO.
Tech from down under goes up in debut
While many tech companies that come public are high growth, they are frequently unprofitable and require outside funding to keep the business running through the losses. Australian enterprise software-maker Atlassian (TEAM) does not fit the usual tech bill: it is high growth, has been profitable for the last ten years, and has scaled without institutional capital. Its products include JIRA (project management), Confluence (content sharing), HipChat (messaging), JIRA Service Desk (service requests) and at least six smaller products. The company provides services to over 51,000 customers, including 79 of the Fortune 100. It does not have a direct sales force, instead using a land-and-expand strategy driven by strong word-of-mouth marketing, free trials and low pricing ($5/user/month/service). This week, the company priced its IPO at $21, 20% above the midpoint, and popped 32% in its debut. It was the first tech deal to price up in its debut since Rapid7 (RPD) came public in July. Atlassian closed Friday at $27.50, a total gain of 31%.
IPO Market Snapshot
169 IPOs have raised $30 billion in 2015; just 41% are trading above their IPO price. The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is down 7.3% year-to-date, compared to -2.3% for the S&P 500. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Alibaba (BABA), Synchrony Financial (SYF) and Citizens Financial Group (CFG). The Renaissance International IPO Index is down 4.4% year-to-date, compared with -9% for the ACWX. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF Holdings include Recruit Holdings and NN Group.
