It looks as if the unclogging is about to begin. REUTERS/Jianan Yu
Twilio, Line, Nutanix, Snapchat.
There are more signs every week that tech's IPO activity could finally pick up again, and the news couldn't come soon enough for investment bankers.
"From an equity capital markets perspective, it's been a tough year,"Frank Maturo, UBS' vice chairman for equity capital markets in the Americas, said in June.
In fact, 2016 has been the worst year for initial public offerings since the height of the financial crisis. There were only 73 IPOs in the first three quarters of the year, according to FactSet. That's down 45% from last year and the lowest total since 2009.
The tech space was even less active, with only a handful of small companies having gone public so far this year.
JPMorgan, the top bank for equity capital markets revenue in the first nine months of the year, has earned $779 million in revenue , compared with $1.05 billion in the same period last year . Morgan Stanley, in second place, has earned only $590 million, down from $997 million last year.
In August, Gadfly's Shira Ovide described it as a clog. Now it looks as if the unclogging is about to begin, as all signs point to a much busier market in 2017 and 2018.
For one thing, the pace of IPOs has increased as the year has progressed. While the first quarter of 2016 was particularly devoid of IPOs , with just nine deals, the number of flotations in the third quarter was 16.7% higher than last year, according to FactSet.
Within tech, the deals that have gone public this year have all been successful.
Twilio, the phone and text-message services company that went public in June, is trading up 304% from its$15 IPO price.
Line, the Japanese mobile-messaging app that hit the markets in July, is up 45% from its initial $32.84 offer price .
Nutanix, the virtualization-software company that started trading on September 30, is up 138% from its$16 initial price.
Coupa, the cloud-software company that hit the markets on Thursday, is already trading up 65% from itsIPO price of $18.
"I can't think of one IPO that's trading down," one banker told Business Insider.
And it's not just the small deals that are starting to roll in. Snap Inc., the parent company of Snapchat, is working on an IPO , which could take place as early as March, a deal that could value the photo-sharing company at as much as $25 billion.
"Snapchat's probably in a position more than other unicorns to address the market sooner rather than later if they want to," the banker told Business Insider, adding that some larger "unicorn" companies could be looking to go public in the first part of 2017, rather than in the middle of the year "with the rest of the pack."
Snap Inc. CEO Evan Spiegel. AP Photo/Jae C. Hong
Of course banks will be scrambling to get in on the action with Snap, which hasn't yet picked underwriters. A separate banker told Business Insider that they expect Snap to choose banks by December.
But Snapchat isn't the only hotly awaited IPO. Okta, the secure-identity-management company, is widely seen as a likely candidate. So are the accounting-software company BlackLine and the performance-Wi-Fi company Quantenna Communications.
As for the larger unicorns, Spotify, Palantir, and Dropbox are other potential contenders, one banker said, while Airbnb and Uber are more likely to go in 2018.
At the end of the third quarter, the six-month pipeline consisted of 30 potential issuers across industries that could raise a combined $5.1 billion in proceeds, according to data from Ipreo.
Here are the top bookrunners that could win big from that backlog.