Written by edgaragentsdb on March 20, 2017
A quick and continuous downturn in IPO activity has analysts wondering if it will ever pick up again. What a change from early 2015 when the upswing in IPOs looked extremely promising.
Nevertheless, one analyst reports that companies are simply delaying their IPOs, giving them more time to build a record performance and enabling investors to become more familiar with them. Another analyst says last year was the worst year to go public based on statistics from the Wall Street Journal, reporting that 70% of the 175 IPOs are now trading below their IPO prices. Making 2015 the worst downturn in 20 years.
But, not all is doom and gloom. Recently, Silver Run Acquisition Corp. raised $450 million in its IPO, aimed at funding the acquisition of energy companies. This positive turn out means investors are taking advantage of the bargain prices in the energy sector due to a lull in oil prices. And, let’s not forget about Regulation A+, which is expected to offer unprecedented opportunities for small companies going public by performing mini IPOs, according to NASDAQ GlobaNewswire.
Under Regulation A+, small companies can raise up to $50 million from both accredited and non-accredited investors every year. This is $45 million above the $5 million allowed under the Regulation A requirements. Also, because investors have more investment opportunities, smaller companies are likely to raise more capital. And, companies are allowed to propose these security offerings under one of two tiers if they are eligible. To learn more about Regulation A+ and its requirements, read our June 15 blog post.
On a similar note, today’s SEC meeting to discuss the capital formation landscape for small and emerging companies is sure to shed some light on industry activity, and the SEC is encouraging it. We are hopeful that industry feedback from this meeting will somehow put a positive spin on future initial public offerings.
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