The IPO market is sputtering back into action with Morgan Stanleyforecasting 35 to 40 floats in Europe in the next two years, with 127 floats in the worldwide IPO pipeline according to Thomson Reuters, and with a big IPO success yesterday in the US with software start-up LogMeIn.
return of the IPO market will be significant for some UK start-ups which are on the verge of profitability.
Europe could be set to raise £12 billion in IPOs over the next two years reckon City experts, while $12 billion has already been raised worldwide from IPOs during this year.
These 2009 IPOs include Vodafone IPO-ing its Qatari operation in a $900 million deal; the $4 billion Brazilian float of Visanet; and the $1.3 billion raised by the flotation of the mining company Zhongwang Holdings in China.
America is leading with 12 IPOs this year. Computer company Rosetta Stone raised $129 million, and two other technology start-ups OpenTable and SolarWinds have seen their shares rise since IPOs earlier in the year.
LogMeIn of Massachusetts, which IPO’d yesterday, is a software company which has five per cent of its shares held by Intel. It raised $106.7 million yesterday by selling 6.7 million shares at $16 apiece, after recording its first quarter of profitability in Q1 2009.
The company provides software that enables users to set up private, remote networks. It has a ‘shredding’ service which includes a device installed on a notebook PC which tracks the PC and can encrypt or delete data remotely. Revenue to the end of March was $17.2 million.
The first day’s trading for LogMeIn shares on the Nasdaq exchange is today. After three hours of dealing, by 4pm UK time, the shares had hit $20.
Successes like these are changing the US mind-set on IPOs, and it’s exactly what the UK needs too.
Which English company looks ripe for a high-tech, morale-boosting IPO? Set forward five year old XMOS Semiconductor of Bristol which should be making profits next year, and is already shipping in volume.
A juicy IPO is just what the UK needs to whet the appetites of VCs, business angels and the government’s many start-up stimulus agencies for putting more money into high-tech UK start-up companies.