Hot Health-Care Market Fuels Biggest VC-Backed IPO Wave Since 2000

Print 05 February 2015
Russ Garland / The World Street Journal

Venture capitalists enjoyed a strong exit market in 2014 with the most IPOs since 2000, led by the health-care sector.

Venture-backed companies raised $15.3 billion in 115 initial public offerings on U.S. exchanges, according to data released Wednesday by the National Venture Capital Association and Thomson Reuters. With 27 offerings, the fourth quarter marked the seventh consecutive quarter with 20 or more venture-backed IPOs.

Life sciences companies accounted for 16 of the fourth-quarter IPOs.

The largest IPO of the quarter was LendingClub Corp., an online financial marketplace that raised $1 billion when it began trading on Dec. 10.

The IPO market, however, was well short of 2000, when 238 venture-backed companies went public in the U.S., the data show.

M&A activity surged ahead of 2013 with 455 deals last year versus 393 in the prior year. The disclosed value of transactions in 2014 was $46.02 billion compared with $16.91 billion in 2013. The fourth quarter contributed heavily to that increase with $26.36 billion recorded, including Facebook’s $19.5 billion purchase of WhatsApp Inc.

Excluding that deal, M&A value in 2014 was 57% ahead of 2013 and the highest since 2007.

Information technology accounted for 80 of the 95 M&A deals in the fourth quarter. After WhatsApp, the largest M&A transaction in the fourth quarter was the $1.8 billion purchase of Alios BioPharma Inc. by Johnson & Johnson.

Deals with a transaction value of four or more times the amount invested accounted for 62% of fourth-quarter acquisitions with a reported value versus 47% in the third quarter.

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