Unhedged Will IPOs ever come back?
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Dec 17, 2024 Craig Coben, former global head of equity capital markets at Bank of America and now a contributor to FT Alphaville, dives into the current state of IPOs and the rising influence of private equity. He discusses why companies are staying private longer and the challenges they face prepping for an IPO. The conversation touches on the regulatory impacts on public markets and contrasts the recovering US IPO landscape with struggles in Europe and Asia. Coben also shares insights on the societal importance of robust public markets.
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Amazon vs. Modern Startups
- Amazon went public in the late 1990s with a small IPO of around $35 million.
- Today, large, valuable companies like SpaceX and OpenAI remain private, highlighting a shift in company strategy.
Adverse Selection in IPOs
- Top companies often stay private, while weaker companies go public due to lack of private bids.
- This can create a negative feedback loop, impacting investor sentiment and valuations.
Private Equity's Standoff
- Private equity firms hold over $3 trillion in assets and delay IPOs due to low valuations.
- They aim for higher returns and avoid revealing true worth, creating a standoff with public shareholders.