Tags: IPO | biotech | Chinese | offering

USA Today: Shades of the Dot-Com Era! New IPOs Are Booming in 2014

By    |   Friday, 14 February 2014 10:55 AM

The initial public offering (IPO) surge so far in 2014 is on a trajectory to rival the 2000 dot-com boom, according to USA Today.

Companies are queued up to get their offerings out the door while the bull market lasts and while investors' risk appetites are strong.

At least 31 companies have come public for the first time thus far in 2014, which represents a 72 percent increase from the same period last year, according to Kathleen Smith of Renaissance Capital.

Editor’s Note:
38 Trades That Could Turn $1,000 Into $49,000

USA Today described it as the best start for IPOs since at least 2006, and on a path to be the best annual start since 2000.

Performance has also been good — the IPOs are up 6.4 percent so far this year on average, according to the FTSE Renaissance US IPO Index, and the companies involved have raised an estimated $6.5 billion.

"The performance is driving the interest. The returns have been good. That encourages more companies to get into the market as well," said Josef Schuster of IPOX Schuster.

Among industry sectors, biotech IPOs lead the pack in 2014, with 14 offerings. But USA Today reported there has been a lack of tech IPOs this year, unlike in 2000 when they helped lead the dot-com boom. This year, there has been only one tech IPO.

Fears of overheating — or an outright bubble — in the biotech space are growing as companies come to market at an early stage of drug development when failures are more likely, according to the Financial Times.

"Inevitably, you'll see more high-risk IPOs without a good story to tell come along to see if they can make it through this window, and it will get harder. When the inevitable crunch comes, it will be painful," John Carroll, editor of industry newsletter FierceBiotech, told the Times.

One big difference between 2014 and the dot-com boom of 2000 is the presence of Chinese companies, Reuters reported.

At least 30 Chinese companies may file for U.S. IPOs this year, lured by high valuations in technology in particular.

Investor enthusiasm for Chinese stocks has outweighed concerns about accounting irregularities and corporate governance that have caused many U.S.-listed Chinese firms to be delisted since 2011, Reuters noted.

Editor’s Note: 38 Trades That Could Turn $1,000 Into $49,000

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Friday, 14 February 2014 10:55 AM
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