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IPO Market Starts to Shine: Report

NEW YORK ( TheStreet) -- Venture capital-backed initial public offerings strengthened during the first quarter of 2011, marking the highest number to go public during a three month period since 2007.

Fourteen venture-backed IPOs valued at $1.4 billion priced during the quarter, up from 9 offerings with a total of $936 million raised during the same period last year, according to the National Venture Capital Association.
LinkedIn filed to go public in January.

Half of the IPO exits for the quarter came from the information technology sector, including data center company InterXion (INXN - Get Report), the largest offering for the period.

Of these offerings, 11 are trading at or above their offering price, like Chinese Internet company Qihoo(QIHU - Get Report), whose IPO doubled in size after its debut, and software company ServiceSource International (SREV - Get Report), which saw shares rise 22% following its offering.

A strong IPO market could spell good news for the 49 companies that have registered to go public but haven't yet priced, like LinkedIn, Pandora and Kayak, said Lou Basenese, chef investment strategist at White Cap Research Group.

"[These companies] are beginning to flock to pack the public markets," he said.

As companies go public, they may also use their IPO proceeds for acquisitions, boosting M&A activity. Reported for the quarter were 109 venture-backed M&A deals, down from 122 during the same quarter last year. Total disclosed M&A value, however, increased to $5.9 billion from $5.6 billion.

Yet despite the slowly improving IPO environment in which tech stocks boast the highest average total return of any sector, don't expect the flood gates to open quite yet, said Paul Bard, vice president at Renaissance Capital, an IPO research firm.

"There are plenty of high-quality venture-backed companies capable of tapping the IPO markets, it's just a question of getting those firms to realize that the market has the appetite to embrace them at suitable valuations," he said, alluding to high-profile start-ups like Facebook, Groupon and Zynga. All of these firms have so far shied away from making the public jump, instead taking in massive amounts of private capital.

--Written by Olivia Oran in New York.

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