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IPO Market Was Weak In Q2

America's venture-backed companies were slow to move towards initial public offerings in the second quarter of 2005, according to two groups.
LONDON — Venture-backed companies were slow to move towards initial public offering in the second quarter of 2005 with only ten venture-backed companies raising $714.1 million, according to Thomson Venture Economics and the National Venture Capital Association (NVCA).

This was a slight decrease in value from the first quarter, when ten venture-backed companies raised $720.7 million on the U.S. public markets. It is also the lowest total offer amount since the second quarter of 2003, the two organizations said.

"Two consecutive quarters at these lower levels begins to get concerning from a macroeconomic standpoint," said Mark Heesen, president of the National Venture Capital Association, in a statement.

"The mergers and acquisitions market for venture backed companies continues to show signs of strength which helps to balance the lackluster IPO market. However, a pipeline of new, public companies is critical to job and revenue creation here in the US. We would like to see these numbers improve in the second half of the year, but what we are hearing is that the regulatory and market hurdles remain high. In many instances, companies are favoring other alternatives such as seeking an acquisition strategy or just treading water."

The largest IPO of the quarter was China Techfaith Wireless Communication Technology's $141.8 million offering. China Techfaith Wireless was backed by Intel Capital, HSBC Private Equity, Global Strategic Investment Fund, and Qualcomm Ventures. China Techfaith Wireless was one of only two technology-based companies to go public this quarter, compared to five that went public in the first quarter, NVCA said.

The life sciences sector had six venture-backed IPOs raise a total of $283.1 million in the second quarter.

In addition to the IPOs completed this quarter, there are currently 38 venture-backed companies "in registration" with the Securities and Exchange Commission. These companies have filed with the SEC in 2004 or 2005 and are now preparing for their initial public offerings.