“ Rare Air”   A Technology IPO Discussion with Blackstone The Blackstone Group LP October 2011 Eric McAlpine Managing Dire...
“ Rare Air”— An Enviable and Small Club of Technology IPOs ________________________________________________ Source:  Capit...
Valuation Multiples in Technology are Being Driven by Growth ________________________________________________ Source:  Cap...
Where’s the Growth in Public Technology Companies? Current public technology companies no longer represent the high growth...
Technology IPOs Offer Investors Access to Outsized Growth Stories The majority of technology IPOs since 2010 had LTM reven...
Disclaimer This material does not constitute an offer to enter any transaction with Blackstone or any of its affiliates.  ...
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Rare Air: A Technology IPO Discussion

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Rare Air: A Technology IPO Discussion

  1. 1. “ Rare Air” A Technology IPO Discussion with Blackstone The Blackstone Group LP October 2011 Eric McAlpine Managing Director [email_address] www.blackstone.com Twitter: @Blackstone
  2. 2. “ Rare Air”— An Enviable and Small Club of Technology IPOs ________________________________________________ Source: Capital IQ. Company filings, Wall Street consensus estimates. Data as of 9/23/11. Note: Data for US technology IPOs from 1/1/10 to date. Excludes Private Equity (LBO) backed IPOs and recently priced IPOs where forward projections are not yet publicly available. (1) LTM revenues as of the date of IPO. Companies with LTM revenues greater than $500M shown as $500M on graph. (2) Forward revenue growth represents LTM to NTM revenue growth as of the date of IPO. Scale vs. Growth for Recent Technology IPOs (2010 – 2011 YTD) Few companies to date have attained “rare air” status – significant scale and growth. Highly anticipated IPOs for category leaders such as Facebook, Groupon, Zynga, etc. could create an enviable club of companies with both attributes. LTM Revenue ($ in millions) (1) Forward Revenue Growth (2) CNVO ELLI SQI MERU IPHI DVOX MKTG BSFT MOTR TNAV RLD CALX IL QLIK NPTN RLOC DMD AOSL ACTV QNST GGS FFN MITL MX FN NQ SQNS CSOD RENN MXL LEDS ONE “ Rare Air” “ The Pack” Anticipated Potential “Rare Air” IPO candidates AWAY “ Knocking on The Door” Z CARB TNGO SSNC
  3. 3. Valuation Multiples in Technology are Being Driven by Growth ________________________________________________ Source: Capital IQ. Market values as of 9/23/11. Valuation multiples in the technology industry are predominantly driven by a combination of top and bottom line growth. TEV / 2011E Revenue vs. 2011E Revenue Growth Price / 2011E EPS vs. LT EPS Growth Semiconductors Hardware Internet Comm. Equipment Software Services = TEV: $500bn
  4. 4. Where’s the Growth in Public Technology Companies? Current public technology companies no longer represent the high growth opportunity equity investors had come to expect. Technology equity investors are looking to the IPO market, albeit selectively, to gain exposure to growth and alpha. 2011 – 2012 Public Technology Market Growth Expected ’11 – ’12 Revenue Growth for Technology Industries Excluding Hardware and Semiconductors Revenue Growth Number of Companies ________________________________________________ Source: Capital IQ. Data as of 9/23/11.
  5. 5. Technology IPOs Offer Investors Access to Outsized Growth Stories The majority of technology IPOs since 2010 had LTM revenues in excess of $100 million with forward revenue growth exceeding 20%, or double the growth of the average public technology company. LTM Revenue Distribution of Recent IPOs (1) ($ in millions) Forward Revenue Growth Distribution of Recent IPOs (2) ________________________________________________ Source: Capital IQ. Company filings, Wall Street consensus estimates. Data as of 9/23/11. Note: Data for technology IPOs from 1/1/10 to date. (1) LTM revenues as of the date of IPO. (2) Forward revenue growth represents LTM to NTM revenue growth as of the date of IPO. # of Companies # of Companies
  6. 6. Disclaimer This material does not constitute an offer to enter any transaction with Blackstone or any of its affiliates. Such an offer would involve, among other matters, the preparation and negotiation of transaction documentation. This document contains highly confidential information regarding Blackstone's investments, strategy and organization. Your acceptance of this document from Blackstone constitutes your agreement to (i) keep confidential all the information contained in this document, as well as any information derived by you from the information contained in this document (collectively, "Confidential Information") and not disclose any such Confidential Information to any other person, (ii) not use any of the Confidential Information for any purpose other than to evaluate entering into a relationship with Blackstone, (iii) not use the Confidential Information for purposes of trading any security, including, without limitation, securities of Blackstone or its portfolio companies, (iv) not copy this document without Blackstone's prior consent and (v) promptly return this document and any copies hereof to Blackstone upon Blackstone's request.
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