NEWS & VIEWS

Global private equity and venture capital news and research

US losing ground in IPO share

31 Dec 2010


The US is slipping in its position as the global leader for IPOs due to tighter regulations and growing competition from other regions.

According to a survey by KCSA Strategic Communications of 50 securities attorneys, whose firms advised on 75 per cent of major US exchange listings last year, 71 per cent believe that the US share of IPOs is declining, and will continue to do so next year, as exchanges in other markets continue to develop in terms of liquidity and sophistication.

However, the outlook is stronger for private equity-backed companies, which three quarters of respondents believe will dominate the IPO landscape for 2011. China is also expected to be a strong driver of US IPOs next year.

“We expect that Chinese companies will, at least in the near-term, continue to list on US exchanges due to the more clearly defined listing rules and regulations and the perceived stability and prestige of the US markets,” said Colin Diamond a partner at White & Case.

Despite the perception that the US’ total share of IPOs is set to decline, 77 per cent of attorneys predicted a stronger IPO market in 2011, with 81 per cent predicting that the Dodd-Frank bill with have no effect on the number of listings. The sectors expected to drive issuance include life sciences, natural resources, consumer and retail, and technology.

Michael Littenberg, partner, Schulte Roth & Zabel, said, “There is a significant number of companies that are preparing to go public, should go public and most likely will go public in the US markets regardless of increased regulatory requirements.

“These are in many cases high quality companies that are at the point in their life cycle where being public makes sense,” he added.

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