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Back to the Future 203
If initial public offerings are a measure of a vibrant, wellfunctioning
economy, then we are failing miserably. The number
of initial public offerings has dropped off steeply in the
United States. In 2009, there were just 69 IPOs; in 2010, that
number rose to around 130, according to Renaissance Capital
in Greenwich, Connecticut. The IPO market is cyclical, and it
was already beginning to revive in late 2010, with white- hot tech
startups like Facebook and Groupon preparing for possible public
debuts. But we’re still a long way from the peak of 756 IPOs
in 1996. Secondary offerings—when public companies sell additional
shares on the market—have also diminished in importance
as a source of capital. (Of course, when corporations can lock in
long- term interest rates of practically zero, thanks to Fed policy,
bonds are an irresistible alternative.)
And who are the lucky few raising public capital these days?
They are likely to be mature companies rather than the younger
growth fi rms we typically associate with IPOs. In the past few years,
General Motors, Banco Santander, and Visa have made their public
debuts (or repeat performance in the case of GM). A good
number of IPOs are being brought to market by private equity
fi rms that took the companies private and are looking to cash
out. Private equity fi rms were behind 39 of the 161 companies in
the IPO pipeline as of September 2010, according to Renaissance
Capital. 6 Those companies include HCA, the largest U.S. hospital
operator (owned by KKR, Bain Capital, and Bank of America);
Toys “R” Us (KKR, Bain Capital, and Vornado Realty Trust); and
AMC Entertainment (Marquee Holdings, an investment company
controlled by private- equity investors including JPMorgan Partners
and Apollo Global Management).
The market debutantes are also likely to be foreign. For the
fi rst nine months of 2010, non- U.S.-based companies represented
about a third of activity and capital raised on U.S.-based markets.
Over that period, 30 foreign companies, including 19 from
China, raised $4.1 billion, according to PricewaterhouseCoopers.
“We’re seeing smaller, rapidly- growing companies from around
the world take advantage of the IPO market for raising capital
to fuel growth—and we expect that trend to continue,” noted