New York flexes IPO muscle
Alibaba chooses U.S. for its initial public offering
Chinese Internet company Alibaba is launching its IPO in New York, underscoring the USA’s standing as the global hub of the new stock boom.
Companies like Alibaba are rushing to list their initial public offerings on major U.S. exchanges, a big blow to European and Asian markets that have tried to create a challenge.
So far this year, 42 IPOs have listed on the New York Stock Exchange or Nasdaq, says IPOX Schuster. That’s more than triple the 13 IPOs that have priced this year so far on the Hong Kong Stock Exchange and more than four times greater than the 10 IPOs that listed on the London Stock Exchange, IPOX Schuster says.
The trend for IPOs to head for U.S. exchanges has been in place for months.
There have been 238 IPOs listed on the Nasdaq and NYSE over the past twelve months, trouncing the 99 on the No. 3 market place in Hong Kong and 68 on London, IPOX Schuster says.
The initial public offering of the Chinese e-commerce site, expected to be the largest Internet deal since Google, is a big win for U.S. markets. By choosing to list on the New York Stock Exchange or Nasdaq over the Hong Kong market, the USA is again emerging as the premier place for high-growth companies to list their shares. It’s a blow to skeptics who thought domestic markets were not competitive with London and Hong Kong.
The raging bull market in the U.S. is a big reason why U.S. markets are winning the battle for IPOs, especially as markets in Asia have lagged for five years, says Josef Schuster of IPOX Schuster.
U.S. markets are also beating out Asian markets for IPOs because companies are permitted to have a dual-class voting structure, which allows the founders to sell shares in a company, but still maintain voting control.
The stakes for exchanges to win new listings is critical as the market for IPOs takes off and is at the most intense clip since the dot-com boom of the late 1990s. With the number of publicly traded companies dropping off, the markets and exchanges that woo the new crop of young companies will be at an enormous advantage.
Meanwhile, the battle for dominance of the U.S. markets has taken an interesting turn. After the Nasdaq’s botched handling of the Facebook IPO in 2012, the NYSE has aggressively gone after tech IPOs. The NYSE won the highest-profile prize last year, with the IPO of Twitter.
But the top source of IPOs this year hasn’t been tech, but biotech. And the Nasdaq remains dominate with biotech companies.