The once white-hot market for initial public offerings in the US has cooled in recent months amid a broader rotation by investors away from high-octane growth stocks.
As shares in sectors including biotechnology and social media sold off, listing companies have found a less receptive and more discriminating investor.
"While growth stocks prices were expanding, investors were willing to aggressively value companies making it a constructive environment for technology IPOs," said David Ludwig, a partner in the equities capital markets group at Goldman Sachs who focuses on technology companies. "Now that valuations have contracted and investors endured significant losses, it is harder to convince them to participate but the market is not closed."
As investors become more selective, companies that want to proceed with listings need to be tactical in how they approach the market. Sizing, structuring and pricing deals is critical to garnering investor demand.