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Posts Tagged ‘zynga ipo’

Here is an article from CNN Money.

“The stars may very well align for the IPO market in 2010. Literally.

Following one of the worst years in recent memory, public offerings are expected to rebound nicely this year, with potentially much of the action centered around several high-profile companies.

Embattled automaker General Motors, for example, has hinted since last summer that it could once again become a publicly-traded company by year’s end.

Private equity giants Kohlberg Kravis Roberts and Apollo Global Management, both of which missed entering the market at the peak of the buyout boom, have both mentioned as possible entries in 2010 recently.

And the IPO rumor mill has been working overtime since social networking giant Facebook introduced a dual-class stock structure in November, a move that often times has preceded a public offering. Google (GOOG, Fortune 500) did the same thing before it went public in 2004.

“I don’t think it is a matter of if[Facebook] can or cannot, it is a matter if they want to,” notes finance author Tom Taulli, who has written extensively about the IPO market.

If Facebook, GM and other brand-name firms decide to enter the public markets, that could help push the number of U.S. offerings far beyond 2009 levels. Last year, just 63 companies went public as investors avoided wading into the market chaos that defined the first half of last year.

Those that did brave the turmoil included a rather strange group of bedfellows –including a Chinese online gaming firm, a company developing lithium-ion batteries for cars and nearly two dozen companies that were backed by private equity firms.

This year though, experts are betting that the IPO market will largely be dominated once again by companies that have been bankrolled by venture capital investors. These companies are typically younger firms as opposed to the mature companies that private equity companies often buy.

During the final months of 2009, 16 venture-backed firms filed to go public, according to Renaissance Capital, a Greenwich, Conn.-based investment firm specializing in IPOs, including drugmaker Ironwood Pharmaceuticals and solar panel producer Solyndra.

With that in mind, Linda Killian, a portfolio manager of the IPO Plus Aftermarket Fund at Renaissance Capital, said that more growth companies are likely to be in this year’s crop of IPOs.

And in the growth company category, there is no industry more buzzed about than social networking.

In addition to Facebook, social networking hotshots Twitter, LinkedIn and Zynga have all been rumored as possible IPO candidates.

Experts tend to agree that it is only a matter of time before many of these firms start considering acquisitions however. And with publicly traded stock, that would certainly give them the currency to do so.

John Fitzgibbon, founder and publisher at IPOScoop.com, said if one social networking company goes public and does well, then conditions would be ripe for the rest to follow.

“You need the trailblazer,” he said. “If Facebook goes into the pipeline, you will probably see more of its competitors start there.”

Read the full article here.

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Here is a recent article from CNN.

“If you have been an investor in technology IPOs in recent months you’ve done well.

Starting in April, and really gathering momentum this summer, there has been a slew of tech companies that leapt through the public market window including Changyou (CYOU), Rosetta Stone (RST), OpenTable (OPEN), and most recently Emdeon (EM).”

The article continues,

“Right now in Silicon Valley, investment bankers are busy making the rounds of promising portfolio companies trying to convince them of the wisdom of an IPO. There is always the question of what kind of company can – or should – go public. During the last wave of tech IPOs, after the dotcom bust, the rule of thumb was that firms with $100 million in revenue and profitability were IPO candidates.

Investment bankers on the prowl in Silicon Valley

Now, according to one prominent venture capitalist who asked to remain anonymous, investment bankers are telling him, “If a company can show revenue of $15 million per quarter, a good business model – and if not profitability, a path to profits – they can deliver an oversubscribed offering.” (One wonders wonder whether these simply are investment bankers who have had nothing to do for the last 12 months, trying to make their bonus figures.)

Venture capitalists have not had much to be happy about, either. It wasn’t just IPOs, but acquisitions that came to a screeching halt during the recession. Both of these groups desperately want the IPO window to stay open, and so far it is.”

And concludes,

“In Google’s day it was bulge-bracket investment banks – Morgan Stanley (MS), CSFB (CS), Goldman (GS), Lehman Bros or no one. The economics of the banks (characterized as going “down-market” to even do $500 million IPOs) required bigger deals. Today’s deals, with their much more modest size, are better tailored for the boutique banks – Thomas Weisel Partners, Jeffries, JMP Securities, Piper Jaffray, and the like. These are the banks pounding the streets in Silicon Valley the hardest.

Could it all end badly? Of course, and usually it does when the rush toward IPOs at some point sends half-baked companies into the public markets and they tank. But between now and then we are likely to see a group of very high quality tech companies look to go public – think Greenplum, LinkedIn, Pacific Biosciences and Zynga among many others.

For those investors with the stomach, it might not get much better.”

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