Liquidnet delays IPO as exchanges, financials writhe
Trading platform operator Liquidnet told Reuters on Tuesday it was delaying its planned $500 million IPO until 2010 because of how bad market conditions have become, and the drubbing financial stocks have taken since the financial meltdown.
Liquident CEO Seth Merrin told our Tokyo correspondent, “Back when we filed to do an IPO, Citibank was trading at $50, Goldman Sachs was at $150 or something.” Today those stocks are trading for $7.30 and $63.30, respectively. And the market for IPOs is so cold, there has only be one IPO in the past four months in the United States.
Add to that the collapse in the stocks of exchange operators since July, when Liquidnet filed for its IPO. For example, NYSE Euronext, which operates the New York Stock Exchange has fallen 55 percent in those five months, while Nasdaq OMX has fallen 21 percent. Liquidnet would likely be lumped together with those stocks by analysts if it went public.
Another threat to the exchanges, and to Liquidnet, which manages electronic networks that let institutional investors anonymously trade large blocks of trades, is the specter of the lower trading volumes. After the panicked recent months that have seen record trading volumes in the United States, trading volumes might only recover in 2010, just in time for a Liquidnet IPO.
In its filing, Liquidnet said the proceeds of the IPO would not go to the company, but to insiders, which include senior management and private equity firm TH Lee Putnam Ventures. One analyst said that takes the pressure of Liquidnet to do an IPO before it’s good and ready.
“If the company doesn’t have an immediate need for capital and can wait for valuation multiples to go back up, it makes sense to wait, ” said Sam Snyder, of Renaissance Capital, a research firm in Connecticut.
Besides, even if it did put itself out there, Liquidnet would not likely tempt any investors.
“When this was filed, it was an IPO that did attract attention very quickly,” said Scott Sweet of IPO Boutique. “However that was prior to the market meltdown- why would investors want to take a chance?”