ERNST & YOUNG SRL

  |  2013-03-04

Institutional investors support IPOs that come to market well prepared

Investors are also clear about what they look for in a successful IPO. Good-quality companies priced right, run by the right team and with a good story to tell will command the attention of the market, even when market windows are opening and closing fast. They rank the top three success factors for IPOs as attractive pricing (the leader by a considerable margin) followed by a compelling equity story in second place and confidence in management in third. Timing was ranked a distant fourth.

Page 1/4
 1 2 3 4   

Foreword:

 

Welcome to our latest survey analyzing institutional investor sentiment toward initial public offerings (IPOs).

 

We are pleased to be able to report that attitudes globally are extremely positive. Among our survey base of 321 investors around the world, 82% have invested in pre-IPO or IPO stocks in the last 12 months, compared with 18% that invested in these stocks during the past two to three years. We expect this positive momentum to continue. Investors cite the prospect of a brighter earnings outlook, improving macro-economic conditions, more stable equity markets and strengthening risk appetite as the top factors likely to improve market sentiment going forward.

 

Investors are also clear about what they look for in a successful IPO. Good-quality companies priced right, run by the right team and with a good story to tell will command the attention of the market, even when market windows are opening and closing fast. They rank the top three success factors for IPOs as attractive pricing (the leader by a considerable margin) followed by a compelling equity story in second place and confidence in management in third. Timing was ranked a distant fourth.

 

It is interesting to note that investors expect to favor investment in their domestic markets for the next three years. This sentiment was particularly true of investors in North America. However, investors in Europe and the Middle East and North Africa region are more willing to invest internationally. We also found that over half the investors surveyed now give active consideration to exchange venue when considering their investment decision.

 

Top challenges to IPO success include wrong pricing, wrong management team and going out to market too early. The good news is that all of these can be managed by companies wanting to list. As ever, it’s all about delivering on your promises — ensuring operational excellence, fulfilling investor expectations, using proceeds as promised and putting in place the corporate governance practices that will sustain a well-managed quarterly reporting program.

Ernst & Young has been the leader in taking companies public for more than a decade. We hope that the perspectives we offer here are of interest and would be happy to share further information and insight on request with companies preparing to list, with investors, and with those already established on the public markets.

 

Page 1/4
 1 2 3 4   

COMMENT ON THIS ARTICLE:




Load new captcha.