Feeds:
Posts
Comments

Posts Tagged ‘Renaissance Capital’

Article from NYTimes.

“Unable to break a three-day slide, shares of Groupon tumbled again on Wednesday, as more investors dumped shares.

For the first time since it went public earlier this month, Groupon broke below its offering price of $20 per share. Shares of Groupon fell 16 percent on Wednesday to close at $16.96.

The popular daily deals site had wrestled with intense scrutiny and volatile equity markets in the weeks leading up to its offering, but its debut was widely heralded as a strong performance. On its first day of trading, Groupon rose as much as 50 percent, before settling at $26.11 per share.

Wednesday’s drop is a disturbing signal for technology investors and other start-ups waiting to go public.

“Selling begets selling,” said Paul Bard, a director of research at Renaissance Capital, an I.P.O. advisory firm. “In the environment we’re in right now, investors are wary of risk, and so these less-seasoned companies will naturally face more selling pressure.”

Technology companies have largely outperformed other sectors in their debuts this year.  Shares of LinkedIn, for instance, doubled on their first day of trading, while Yandex, the Russian search engine, surged more than 55 percent on its debut.

But for many, the glitter has come off just as fast. Pandora, which went public in June, has dropped nearly a third from its offering price. Renren, often described as the Facebook of China, is about 74 percent below its offering price. Both Pandora and Renren tumbled again on Wednesday, with Pandora off roughly 11 percent and Renren down 6 percent.

According to data from Renaissance Capital, the technology sector has seen 41 I.P.O.’s this year, with an average first-day pop of 20.3 percent. Year-to-date, however, the group has lost about 13.1 percent in value.

The widespread pullback seems to suggest that investors, while eager to capitalize on first-day gains, do not have the confidence, or stomach, to hold on to the Web’s latest offerings. That apprehension is likely to be a major concern for high profile start-ups, like Zynga and Facebook, both of which are expected to go public in the coming months.

“When returns turn negative, that creates a problem for the I.P.O. market,” Mr. Bard said. “Because what’s the incentive to buy into the next I.P.O.? Bankers are now probably revisiting how many and which deals they will launch.”

Read more here.

Read Full Post »

Here are some interesting stats on IPO´s from Forbes.

“More technology companies went public this year despite a world economy still trying to find its footing, and that is a good sign the pace of tech initial public offerings might accelerate in 2010.

Ten tech companies have gone public so far this year, raising $3.8 billion. In 2008, there were three offerings that raised $749.2 million, according to Thomson Reuters data.

Tech deals account for the biggest number of IPOs so far this year and are second only to finance deals in value.

‘We’ve been expecting an uptick in technology because it has really been underrepresented in the market over the last few years,’ said Paul Bard, a research analyst at Connecticut-based Renaissance Capital.

There could be 40 to 50 tech IPOs next year, raising $4 or $5 billion, Bard said.

Tech IPOs did well in 2007, but nearly shut down when financial markets collapsed last year. Getting more small, high-growth tech companies into the IPO mix would be a major engine for jobs and a boon for investors, analysts said.

‘If they’re done right, tech IPOs historically have had the greatest increase in revenues and profits of all IPOs,’ said Scott Sweet, senior managing partner at IPO Boutique.

Three technology companies filed for IPOs this week.

Netherlands-based Sensata Technologies Holding B.V. on Wednesday filed an offering worth up to $500 million. The firm, whose customers include BMW, Huawei Technologies Co Ltd and Samsung, makes sensors and other industrial technology.

Chipmaker Telegent Systems Inc filed for a deal worth as much as $250 million, and software maker RedPrairie Holding Inc said it would try to raise $172.5 million in its IPO.

‘There is an enormous amount of capital on the sidelines right now, in mutual funds and hedge funds, looking to make high-return investments as they would find in technology IPOs,’ said America’s Growth Capital Chief Executive Ben Howe.

Howe warned that investors have become more cautious and companies without strong balance sheets could meet a lukewarm response. A good idea used to be enough for a tech company to go public, he said, but the financial crisis has changed that.

Sensata, which filed for the largest IPO this week, posted revenues of $796.9 million in the nine months ended Sept. 30, down 31 percent from $1.2 billion a year ago. In the same period it narrowed its net loss to $41.6 million from $82.3 million.”

Read the full article here.

Read Full Post »

Here is some good insights from Chris O´brien at SiliconBeat.

“This morning my inbox contained the latest report from Renaissance Capital. It has some hopeful news about IPOs, but not necessarily for Silicon Valley.

First, the good news: ”After an uptick in filing activity, there are 67 companies in the active IPO pipeline, up from 29 in March 2009.”

As far as Silicon Valley is concerned, that’s about as far as the good news goes. Now, here’s the bad news.

According to Renaissance:

“Today, the tech, healthcare and retail growth stories that have driven past market revivals have been conspicuously absent from the latest wave of  IPO hopefuls.  This makes sense, given the historic consumer shut-down and the anti-business and investment rhetoric emanating from Washington.  In their place, there is a pool of unusual candidates shaped by an era of cheap credit and  the unprecedented mortgage crisis that followed.  At least for the near term, it appears that the IPO market will be dominated by opportunistic investment vehicles and businesses from the mid-decade buyout bubble.”

And his post concludes:

Currently, there are seven venture-backed companies in the IPO pipeline. Could there be more? Renaissance gives a round up of likely suspects:

“Besides the social networking giants Facebook, Twitter and LinkedIn, there have been several other rumored IPO candidates from the VC community as the market began to recover in early March.  Near-term, we expect the majority of new venture-backed IPO filings to come from the technology and alternative energy sectors.  Potential IPO prospects from each of these industries include online games company Zynga, ethernet network equipment provider Force10 and property & casualty software maker Guidewire in the technology sector, and smart grid company Silver Spring, solar panel maker Solyndra and electric car manufacturer Tesla Motors in alternative energy.”

Read the full article here.

Read Full Post »

Here is an excellent Bloomberg article by way of statesman.com.

“SAN FRANCISCO — Acquisitions of startups fell to the lowest level in a decade in the second quarter as the recession stopped companies from buying smaller competitors.

A total of 59 startups merged with other companies, a drop of 30 percent from a year earlier and dropping to the lowest level since 1999, the National Venture Capital Association said. Five U.S. startups have had initial public offerings so far this year. In 2007, before the financial crisis, there were 86.

Acquisitions and IPOs — the two ways for venture capitalists to cash in their investments — have almost come to a standstill, NVCA President Mark Heesen said. With the IPO market struggling, larger technology companies — confident that prices will fall — are waiting before proposing takeovers, he said.

“The buyers on the merger and acquisition side got smart real fast,” Heesen said. “They wait for companies to come crying to them to get bought.”

No venture-backed companies went public between September and March — the longest slump since the association began collecting data in 1971. Only 11 startups have had IPOs since the end of 2007, and there is little immediate prospect for improvement, said Paul Bard, an analyst at Renaissance Capital.

Only 10 startups have filed pre-IPO paperwork with U.S. regulators, and none has done so since January, said Emily Mendell, an NVCA vice president. That signals that deals such as the May IPOs of Austin-based SolarWinds Inc. and online restaurant-reservation service OpenTable Inc. failed to spur other young companies to act.

It also means the market won’t revive in the next few months, Bard said.

“Unless filing activity spikes in the next two to three weeks, we’re unlikely to see a more sustainable pickup in VC-backed IPOs before Labor Day,” Bard said. “The bar will remain high for most VC-backed deals to get done.”

Even if the 10 biggest venture capitalists had 25 companies ready to go public by early next year, that would still leave IPOs at about a third of their levels from 2004 to 2007, he said.

That means startups lack bargaining power in merger talks, a situation that is keeping offers low and stalling many negotiations that do occur, Heesen said.

Only 13 of the 59 companies that sold out reported how much they were paid, the association said. Prices were higher than in the first quarter, a possible sign of improving conditions later this year, it said.

Cisco Systems Inc.’s $590 million deal to buy Pure Digital Technologies Inc., maker of the Flip Video camera, helped drive up the average merger price to $197.7 million.

Five companies commanded less than venture capitalists had invested, the venture capital association said. Purchases of medical-instrument makers CoreValve Inc. and Chestnut Medical Technologies Inc. were the only ones in which early backers received 10 times their outlay, the traditional standard for a venture-capitalist home run, Mendell said.”

Read the full article here.

Read Full Post »