With more technical IPOs than the bell-ringing slots available on US exchanges, investors made billions of dollars in profits.
But the winners went far beyond Silicon Valley’s venture capital network.
Uber and Tencent join SoftBank as the biggest stakeholders in Chinese ride-hailing service Didi Chuxing, which debuted on the New York Stock Exchange on Wednesday and closed with a market cap of $67.8 billion. Delta Air Lines is one of the top investors in airport security vendor Clear, which rang the opening bell on the NYSE.
Among venture firms, New York’s Insight Partners had the biggest day, thanks to a $1.45 billion stake in cybersecurity software company SentinelOne, while Highland Capital has more than $500 million worth of shares in Axometry, a manufacturing market.
There is also a lot of money for private equity firms. Francisco Partners owns more than a quarter of LegalZoom, celebrated Wednesday by opening it on the Nasdaq, and advertising tech-company Integral Ad Science is owned by Vista. Integral rang the closing bell of the Nasdaq.
While the IPOs of software companies Confluent and Doximity last week rewarded familiar venture names like Benchmark, Index Ventures and Emergence Capital, this crop of deals underscores the tech’s thirst in the investment universe. Capital has been poured into the tech industry, from buyout firms and mutual fund managers to large publicly traded companies, playing an outsized role in the broader economy.
Didi Wednesday was the biggest opening ever after the company raised $4.4 billion in its IPO. According to PitchBook, its largest investor is SoftBank, which began buying shares in 2015 at a post-money valuation of $16.5 billion. The firm, primarily through its Vision Fund, acquired a $13.7 billion stake as of the close of business.
Traders work during the IPO of Chinese ride-hailing company Didi Global Inc. on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., June 30, 2021.
Uber has an $8.1 billion stake in Didi after handing it over to its rival in 2016 and selling its Chinese business in exchange for Didi shares. Uber valued its Didi stock at $5.9 billion at the end of March.
Uber’s former chief business officer Emil Michael tweeted earlier this week that Uber’s unexpected success stemmed from a $2 billion investment.
“Almost every stakeholder was against our massive investment in China and was consistently negative about it,” Michael wrote in one of several tweets about the deal.
Chinese Internet giant Tencent has a $4.4 billion stake in Didi after investing in early 2013. Apple and Alibaba also invested in later years, but they each own less than 5% of the company, so their holdings are not disclosed in the prospectus.
‘Reduced hassle’ at the airport
Clear, whose biometric devices help passengers zip through airport security lines, has a market cap of $5.9 billion, as its stock rose 29% to $40 in its NYSE debut.
T. Rowe is Price Clear’s largest outside investor, with a stake of about $763 million, followed by venture firm General Atlantic at $596 million.
Delta’s shares are valued at $331 million due to investments involving the partnership between the two companies. At the airline’s hub in Atlanta, Delta uses facial recognition systems so that passengers can quickly board some international flights without showing a boarding pass or passport. In 2017, Clear began operations at New York’s John F. Kennedy and LaGuardia airports, and it pays a revenue share to Delta instead of paying the airport, according to the prospectus.
“Our customers tell us that their time is valuable, as is a consistent, enjoyable airport experience with less hassle,” Delta CEO Ed Bastian said in a press statement at the time of the agreement in 2016. What this partnership will bring to our customers.”
SentinelOne climbed 21% on Wednesday after the company raised $1.2 billion in its IPO. Insight Partners, which is in the middle of a winning streak from Israel’s Monday.com and WalkMe’s IPOs, is the top shareholder. Tiger Global, an investment firm known for late-stage tech deals, has a stake of $1.1 billion.
Axiometry, which provides technology for on-demand manufacturing, was the biggest pop in Wednesday’s IPO, nearly doubling from its $44 offering price to $87.39.
The company ended the day with a market cap of $3.7 billion. Highland Capital, which operates in the Bay Area and Boston, led the $8.8 million investment in 2015 at a valuation of $40 million. T. Rowe Price led the most recent private round last year at a valuation of about $550 million.
Axiometry CEO Randy Altschuler told CNBC’s “The Exchange” that while an IPO was the best option for the company, there are other ways to go public, such as a direct listing or special purpose acquisition company, or via SPAC.
“We had a lot of excitement coming into our debut today, and we thought, hey, let’s build a book of long-term investors and build a great company,” he said.
Big returns for buyout firms
Two private equity deals from 2018 also paid off well on Wednesday.
Francisco Partners nearly quadrupled its money in LegalZoom, less than three years after the firm invested $300 million in a deal that valued the legal services site at $2 billion. The stock climbed 35% to $37.85 on Wednesday, with LegalZoom’s market cap rising to $7.3 billion and Francisco’s stake reaching $1.1 billion.
Vista’s return on Integral Ed Science isn’t as dramatic on a percentage basis, but the total dollar amount is even higher. In June 2018, Vista bought the majority of the ed-tech company in a business transaction of $835 million, according to Pitchbook.
Integral Aid shares rose 14% to $20.58, bringing the company’s market cap to $3.1 billion. Vista’s 70% stake is now worth over $1.94 billion.