THE US treasury is assembling investors, bankers and entrepreneurs for talks on how to spur small companies’ access to equity capital amid concern at the lacklustre market for initial public offerings (IPO).
Despite a strong start for the US IPO market in 2011, officials are concerned that the time from start-up to flotation has risen from eight to 10 years, and that regulatory barriers might be dissuading companies from accessing the public markets.
“We are trying to look at high-growth companies that could become quite significant, and if there any hurdles or barriers in the markets we can look at,” said Mary Miller, assistant treasury secretary for financial markets.
Facebook is the most recent high-profile example of a company shunning a public listing in favour of private capital raising.
However, Ms Miller said the conference – to be held next week and chaired by Tim Geithner, treasury secretary – was about the future Facebooks, “the gazelle companies, the jack rabbits . . . .high-growth companies that could become quite significant”.
“We would like to explore the question of why some companies choose not to go public,” said Ms Miller. “Some of that is the effect of the financial crisis and some of that is cyclical . . . is that a market failure or not?”
The US IPO market is off to its best start since 2000, with $12.5 billion raised so far in 2011. But the great bulk has been raised by mature companies owned by private-equity firms. – (Copyright The Financial Times Limited 2011)
