SAN FRANCISCO, April 2, 2007 (PRIME NEWSWIRE) -- Thirteen (13) U.S. headquartered venture-backed companies completed initial public offerings (IPOs) in the first quarter, raising $1.20 billion, double the aggregate amount raised a year ago ($599.2 million), according to the Quarterly Liquidity Report from Dow Jones VentureOne. The number of IPOs held steady with the same number completed in the first quarter of 2006, although with seven technology IPOs, it was the most completed in a single quarter for the IT category since the third quarter of 2004.
The quarterly data found that venture-backed liquidity exits via mergers and acquisitions (M&As) also remained strong. Some 95 M&A transactions were completed in the first quarter of 2007, down from 111 in the first quarter of 2006, but the total amount paid for these companies grew 11% to reach $9.39 billion. This was the most paid for venture-backed companies in a single quarter since the fourth quarter of 2000.
"As several venture capital investors indicated at the recent VentureOne Outlook conference, 2007 is lining up to be a strong year for exits with a significant level of IPO activity expected for technology companies and higher prices being paid to acquire other promising start-ups," said Stephen Harmston, director of global research for VentureOne.
Among the seven technology IPOs that occurred in the first quarter, the median amount these companies raised in equity prior to going public was $89 million, the most on record. The median pre-money valuation for a technology IPO was $477.1 million, the highest valuation since the fourth quarter of 2001, the data showed.
The largest IPO of the first quarter was the $198.3 million IPO for Tampa, Fla.-based Switch and Data (Nasdaq:SDXC), which provides shared infrastructure facilities and basic support services for clients in the telecommunications and data/Internet industries.
There were also five healthcare IPOs in the first quarter and one IPO for a retail business, according to the quarterly report. The overall median pre-money valuation for all IPO companies reached $315.9 million, while the median amount the IPO companies raised prior to going public was $56 million. The median time for these companies to go from initial equity financing to IPO was 6.1 years, a slightly shorter timeframe than the 6.6 years it took the IPO companies in the first quarter of 2006.
The quarterly report showed that technology companies also dominated the number of completed first-quarter M&A transactions, with 68, representing more than two-thirds of the total. There were also 12 healthcare acquisitions and 12 acquisitions of companies in the business, consumer and retail category. For all industries, the median amount paid for an acquired company in the first quarter of 2007 reached $105 million, more than twice as much as the first quarter of 2006 when it was $47.5 million. In fact, the $105 million is on par with the acquisition prices paid in 2000, according to the historical data.
Meanwhile, the amount raised in equity prior to being acquired was $21.5 million, indicating a significant level of return for investors, according to the quarterly data. The median amount of prior equity is about the same as last year. Even more significant was the median price paid for technology companies, which was considerably higher at $268 million, while the median amount of equity that technology companies raised prior to acquisition was $48.1 million, the quarterly report found.
The time between initial equity financing and M&A continued to grow, standing at about 6.4 years in the first quarter, compared to 5.9 years in the first quarter of 2006.
The largest venture-backed M&A of the quarter was State Street's (NYSE:STT) $564 million purchase of New York, NY.-based Currenex, an online global currency exchange that links institutional buyers and sellers worldwide.
The investment figures included in this release are based on aggregate findings of VentureOne's proprietary U.S. research. This data was collected by surveying professional venture capital firms, through in-depth interviews with company CEOs and CFOs, and from secondary sources. These venture capital statistics are for equity investments into early-stage, innovative companies and do not include companies receiving funding solely from corporate, individual, and/or government investors. No statement herein is to be construed as a recommendation to buy or sell securities or to provide investment advice.
Dow Jones VentureOne (www.ventureone.com and www.venturecapital.dowjones.com), a unit of Dow Jones Financial Information Services, has been the leading provider of finance and investment data to the venture capital industry for almost 20 years. Dow Jones VentureSource, a sophisticated electronic database on the venture capital industry, is published by VentureOne.
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Dow Jones VentureOne Michelle Jeffers (415) 439-6666