AIM, London creep upward -- watch out.
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There were 19 IPOs on U.S exchanges, up from only 10 in the first quarter, according to a survey just released by Thomson Financial and the National Venture Capital. However, the NVCA said it doubts whether these numbers are sustainable; the performance of the recent IPOs hasn't been all that favorable.
More significantly, three US venture-backed companies went pubic on foreign exchanges (two on AIM and one on the London Stock Exchange), a trend the NVCA says it is "watching closely as we are hearing anecdotally that venture-backed companies are becoming more compelled to choose these markets over the NASDAQ due to regulatory burdens associated with SOX compliance."
It's worth noting that NVCA is the country's venture capital lobby, and is always going to argue that the IPO/venture industry is too regulated. And keep in mind that competing industry research group, Dow Jones/VentureOne, has argued AIM does not yet threaten the NASDAQ when it comes to taking public the best companies. AIM does not have near the liquidity, and IPOs on that market can be seen as mere follow-on venture rounds because the amounts raised are so modest, according to Steve Harmston, who is director of global research for Dow Jones.
However, Harmston's views were expressed a few months ago, before the latest action. And trends change quickly in a global market. And just because the NVCA says something representing its interests, doesn't mean it's wrong. So the U.S. Conress should be looking closely.
We continue to believe, as has been argued by experts in the field, that SOX rules themselves are good for companies, and that the real problem is that there is not enough guidance for how companies implement them. Regulators should move quickly to establish such guidance, so that small companies in doubt aren't paying attorneys and accountants exorbitant fees to comply with SOX in ways they don't need to. Otherwise, an increasing number of VCs will consider taking their companies public on AIM (see reasons here), and the U.S. will lose its position as center of the IPO universe.
http://www.siliconbeat.com/cgi-bin/mt331/mt-tb.cgi/1543
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