Why the number of IPOs is falling, according to Nasdaq's CEO
The number of companies taking their businesses public so far this year may be indicative of a healthy IPO market, but according to Nasdaq CEO Adena Friedman, regulation is derailing companies’ decisions to go public.
“The act of going public today is such a difficult decision, and there’s so many new obligations and regulations that are placed on companies when they go public, it makes it very much a difficult decision today,” she said on Wednesday during an interview with FOX Business’ Liz Claman.
Year-to-date, 160 companies have gone public on the Nasdaq, compared to 96 this time last year, she said. But in 1996, there were more than 697 IPOs. In 2008, after the financial recession hit, that number fell to a record low of 14.
“However, this year and 2014 are sort of standout years if you look back over 10 and 15 years, those are really the only two healthy years,” she said. “We’re nowhere near where we were in the 90s. So, really regulation has a lot to do with it.”
Some notable potential IPOs that investors are eagerly watching include Uber, Lyft, Airbnb and Postmates. Lyft is reportedly preparing its IPO for March or April, while Uber CEO Dara Khosrowshahi said the ride-sharing app is still on course to go public in the latter half of 2019.
Two weeks ago, the president of the New York Stock Exchange Stacey Cunningham struck a note of optimism about the IPO market, which she said is on target to outpace 2014.
So far this year, there have been more than 50 deals that have come to market, raising more than $26 billion. But, about 33 percent of those proceeds have been raised outside of the U.S., Cunningham said, largely from China.
“China’s been leading the way on that,” she said. “So we’re still a very welcoming place for China to come raise money in the U.S. I think it’s an area that is closely watched.”