FT News Briefing Tuesday, December 31
Dec 31, 2019
Private equity groups made a splash this year, outpacing expenditure since the financial crisis. The forecast for IPOs in 2020 looks bright, but many unicorns are delaying their public debuts, with the impacts of WeWork's failed listing looming large. As recent IPO performances unfold, a spotlight shines on investor sentiment regarding loss-making companies. The discussions also touch on the evolution of responsible capitalism and the implications for notable players like Airbnb and ByteDance.
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Private Equity Boom
- Private equity dealmaking reached its highest value since 2007, totaling $478 billion in 2019.
- This surge is driven by cheap debt and pension funds seeking high returns in a low-interest environment.
IPO Performance
- Many high-profile IPOs in 2019, like Uber, Lyft, and Slack, underperformed after going public.
- Public markets seek strong revenue growth and signs of profitability, which these companies lacked.
WeWork's IPO Failure
- WeWork's failed IPO demonstrates that investors are discerning and won't accept inflated valuations for loss-making companies.
- Public investors demand a clear path to profitability, which WeWork couldn't provide.