2008 IPO Report - Initial Public Offerings

Regional IPO Market Review and OutlookNew EnglandNew England enjoyed its best year since2000, producing 23 IPOs with $3.03 billionin gross proceeds in 2007, compared to 13IPOs and $1.99 billion in gross proceedsin 2006. The number of New England IPOsin 2007 topped the number from 1998, thebeginning of the bubble, and representedmore than a five-fold increase over the levelof IPO activity in the 2001–2003 period.Massachusetts contributed the lion’sshare of the region’s IPOs in 2006 (20of the 23). New England retained its highconcentration of technology-relatedactivity, with 19 tech IPOs making up83% of the region’s total. Eight of the techrelatedIPOs came from biotech or medicaldevice companies and four were fromsoftware companies—two sectors oftraditional strength in New England.Underscoring the strength of tech-relatedIPOs in 2007, the region produced sevenIPOs that had proceeds in excess of $100million: athenahealth ($113.2 million),Constant Contact ($107.2 million), Insulet($115.5 million), Monotype Imaging($132.0 million), Netezza ($108.0 million),Starent Networks ($126.4 million) andTechTarget ($100.1 million). The averageNew England tech IPO ended the yearup 21% from its offering price, while theaverage non-tech IPO in the regionperformed even better—up 23%.We expect that continued strong levelsof venture capital investment in NewEngland, along with the region’s worldrenowneduniversities and researchinstitutions, will continue to providea fertile environment for new companiesand IPO candidates. If market conditionsare conducive in 2008, we anticipateIPOs from technology and life sciencescompanies based in New England—and from Massachusetts in particular.Tri-StateThe number of IPOs in the tri-state regionof New York, New Jersey and Pennsylvaniadeclined 53%, from 36 in 2006 to 17in 2007, but gross proceeds edged downonly 5%, from $8.51 billion to $8.08billion. Average deal size in the regionspiked from $236.4 million in 2006New England IPOs – 1996 to 2007# deals7934Source: SEC filingsTri-State IPOs – 1996 to 2007# deals22Source: SEC filings464135 41996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 20071328445893214 131996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007to $475.3 million in 2007, boosted by threevery large IPOs by private equity firms:Blackstone ($4.13 billion), Fortress ($634.3million) and Och-Ziff ($1.15 billion).In addition to six IPOs by financialservices companies—the leading sectorin the region—the tri-state regionproduced six IPOs in various technologysectors, including biopharmaceuticals,healthcare and wireless. The region alsosaw three energy-related IPOs, includingOcean Power Technologies, which becameone of the few US companies to completean IPO in the United States after initially4929162513362317$ billions3.632.59$ billions0.873.648.041.025.460.40 0.531996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 20078.255.739.5314.755.439.357.070.612.765.37 5.171996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 20071.998.51listing on the London AIM market.The average tech IPO in the tri-stateregion ended the year down 9% fromits offering price, while the average nontechIPO in the region inched up 2%.Venture capital activity in the tri-stateregion now trails only that of Californiaand New England. We expect thatthe region’s VC-backed companies—including technology and life sciencescompanies—as well as spinoffs fromthe region’s established companies,will continue to produce a healthycrop of IPO candidates in 2008.