Global meltdown slows IPO appetite of entrepreneurs

Entrepreneurs who are looking to raise funds by selling stake in their businesses are in for a tough time. A study by Barclays Wealth shows that the appetite for IPOs has flagged, and buyers are not willing to open their purses.
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Dec 10, 2008, 05.33 PM | Source: CNBC-TV18

Global meltdown slows IPO appetite of entrepreneurs

Entrepreneurs who are looking to raise funds by selling stake in their businesses are in for a tough time. A study by Barclays Wealth shows that the appetite for IPOs has flagged, and buyers are not willing to open their purses.

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Global meltdown slows IPO appetite of entrepreneurs

Entrepreneurs who are looking to raise funds by selling stake in their businesses are in for a tough time. A study by Barclays Wealth shows that the appetite for IPOs has flagged, and buyers are not willing to open their purses.

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Entrepreneurs who are looking to raise funds by selling stake in their businesses are in for a tough time. A study by Barclays Wealth shows that the appetite for IPOs has flagged, and buyers are not willing to open their purses. 

 

Here is a transcript of Priyal Guilani’s comments on CNBC-TV18. Also watch the accompanying video.

 

Initial public offerings (IPOs), so far considered the holy grail for entrepreneurs looking to raise funds or taking their business to the next level, have become a hard nut to crack. A report by Barclays Wealth says, with valuations continuing to be extremely depressed, entrepreneurs are postponing their IPO plans. 

 

According to European Venture Capital Association, only 41 companies went public in the third quarter of 2008 as against 98 companies in the second quarter.

 

And data from Europe reveals that of the 63 exits, in the second quarter only three were IPOs.

Clearly alternative routes may be the only option for entrepreneurs to walk down.

 

Satya Narayan Bansal, CEO, Barclays Wealth, says, “Entrepreneurs will have to move more towards PE deals and consolidation M&A, which will be more feasible than IPO.”

 

However, given the current global economic scenario, these alternate routes will mean entrepreneurs having to answer some tough questions.

 

According to Zephr, a data provider, 1275 PE deals globally took place in the third quarter last year. The number has now fallen to 705 deals in the same period this year. Also, there is a sharp decline in the value as well, from USD 447 billion in 2007 to USD 57billion in 2008.

 

The going may be tougher now, but there's still a silver lining. The study, which surveyed over 2300 HNIs and ultra-HNIs across the world, suggests that Indian entrepreneurs see the current crisis as an opportunity rather than a challenge. And with respondents voting Asia the second-most conducive place for start-up businesses, it may be too early to sound the death toll.

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Global meltdown slows IPO appetite of entrepreneurs

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