News article about IPOs:
arizonarepublic.com
Brother, can you spare an IPO?
Hopefuls troll other sources to raise cash
Bloomberg News
May. 10, 2000
NEW YORK - Bill Brady knows the party is over. Now, Credit Suisse First Boston's chief technology banker and his Wall Street peers are telling their clients.
His message: If you're a company like PacketVideo Corp. and Techies.com Inc. with big ideas but little revenue, you can forget the initial public offering that would have yielded an overnight, multibillion-dollar valuation.
As many as half the 370 companies that have filed with regulators to raise $37 billion in IPOs will be forced instead to raise cash in private markets or from strategic investors. That contrasts with last year, when more than eight in 10 companies filed completed IPOs.
''We'll steer about a third of the companies that way that would otherwise have done an IPO,'' Brady says. CSFB has 56 companies in the pipeline, more than any investment bank, planning IPOs worth $5.75 billion.
Newly listed shares tumbled the past two months, driving investors to companies that are generating profits or have obvious growth prospects. Even as Internet shares tumbled, more than seven companies a day registered IPOs in March and April, according to Comm- Scan LLC. More than 80 percent were losing money, and 40 percent had revenue under $5 million.
The investor route has driven many companies - especially those with what bankers call little more than a high price-to-vision ratio - into retreat.
''If only 50 percent to 75 percent get done, it wouldn't surprise me,'' said Steven Barg, managing director in UBS Warburg's U.S. capital markets unit.
Barg has told a ''handful'' of the two-dozen companies whose IPOs it was hired to arrange they should consider looking elsewhere for cash. Other bankers are doing the same.
''We are suggesting alternative options to some,'' said Michael Ott, co-head of U.S. equity capital markets at Deutsche Banc Alex. Brown. ''For the most part people understand the implications of the correction and are open to rethinking strategies.'' |
