from Commentaries:
Don’t hold your breath for European flotations
A web-based survey of more than 40 European institutional investors by investment bank Jefferies shows most -- 83 percent of those who responded -- are not expecting a re-opening of the IPO market in the UK and Continental Europe before the middle of 2010.
Only 23 percent of the analysts, portfolio managers and dealers surveyed reckon the IPO market will re-open by the end of this year.
Seems the world is still split on what type of companies will be floated though:
"40% of respondents believe that classic growth stories, similar to the deals priced in the US with their tech themes, will be best received at the early part of the cycle. However, 46% believe that more defensive growth companies will dominate."
Some other interesting tidbits: A third of those polled said they would only buy shares in the IPO of a profitable company, half think GDP growth is a pre-cursor to IPO activity taking off again and liquidity is key, with an expected free float of at least $100 million the starting point.
All food for thought for anyone thinking of floating or spinning off a business. After all, it usually takes months to get them off the ground.
Can this hybrid jump-start the IPO market?
One of the biggest criticisms made of the IPO process is that investment banks turn around and flip hot new stocks for a big, quick profit, crowding out institutional investors with a longer attention span, and showing with no regard for a company’s long term prospects.
But Menlo, California-based InsideVenture, which is backed by major venture capital firms such as Venrock and Frazier Ventures, major institutional investors such as T Rowe Price, and even the New York Stock Exchange, thinks its new Hybrid Private-Public Offering (HPPOs) method of launching IPOs, introduced this week, is a way around that problem and a way to spur a recovery in the IPO market.
Here’s how an HPPO would work: small and mid-cap companies would still have to file standard IPO registrations with the U.S. Securities and Exchange Commission. But the company would then work with InsideVenture to allocate about half the shares to its existing shareholders and any of the 225 long-term fundamental investors that are InsideVenture members. Once it had lined up a roster made up of enough long term investors, the company would launch its IPO.
InsideVenture CEO Mona DeFrawi told Reuters in November that the disappearance of boutique investment banks after the dot com bust earlier this decade left the major investment banks focused mostly on larger-cap companies, leaving an opening for her firm’s services.
In March, InsideVenture introduced 50 private healthcare and tech companies to its member institutional investors at a conference, but a spokesman for InsideVenture said no companies have yet filed to do an HPPO-type IPO.
Still, with an IPO market that so far in 2009 has only seen seven deals, by mature companies at that, anything is worth a try.
(PHOTO: Reuters/Chip East, New York Stock Exchange, March 2009)
from Funds Hub:
Staying positive
There seems to be an endless wave of bad news hitting the hedge fund industry at the moment -- gates and suspensions, record poor performance, the Bernard Madoff scandal and so forth -- but there are still one or two reasons to be positive.
According to a survey of institutional investors by alternative assets data group Preqin, conducted in January (and therefore after the alleged Madoff fraud came to light), only 8 percent said they were no longer confident about hedge funds and would reduce investments.
By contrast, 26 percent said they would be increasing their allocations this year.
This appears to be a more positive picture than for high net worth individuals, who, according to some anecdotal evidence, have become more cautious on hedge funds.
Institutions such as pension funds, in contrast, tend to have time horizons running into decades, so a year of bad performance is not necessarily the be all and end all.
They have also seen equities, which constitute a far greater portion of their portfolios, plummet last year, leaving hedge funds, relatively speaking at least, looking quite good.
Having followed wealthy individuals into hedge funds and helped fuel the industry's massive growth of recent years, they could end up supporting it through the difficult times.
Yes, paying more attention to history would probably have helped in this crisis. But it’s a tough one when it comes to hedge funds – the industry has not been going, on this scale at least, for very long so there is not much history to learn from.
