Venture-backed companies have staged a comeback in the private markets, with acquisitions of $7.3bn and initial public offerings (IPOs) raising $220m in the fourth quarter indicating an upturn in the market, according to industry tracker Dow Jones VentureSource.
The year’s largest IPO was the $371m offering by Massachusetts-based rechargeable lithium ion battery producer A123 Systems, in late September 2009, according to Dow Jones. A123′s public offering followed a $249.1m award in 2009 from the US Department of Energy.
Eight companies completed public offerings in 2009 raising $904m, a 64 per cent increase from the $551m generated through seven IPOs in 2008. However, the IPO market is ‘still anaemic’ in comparison to pre-economic downturn levels, according to Dow Jones, which records $0.9bn in IPOs raised in 2009, up from $0.6bn in 2008, but far below 2007 levels of $6.9bn.
‘With 25 venture-backed companies currently in IPO registration, it is clear that many entrepreneurs and their investors expect the market to improve in the coming year,’ said Jessica Canning, director of global research for Dow Jones VentureSource.
Throughout 2009 venture-backed companies generated $17.1bn in liquidity, with 44 per cent of the year’s liquidity generated in the fourth quarter. The yearly total is 34 per cent less than the $26.1bn produced in 2008, according to Dow Jones.
Canning said, ‘As the economy improves, acquirers are gaining confidence in their own financial situation and returning to strategic acquisitions. At the same time, the steady trickle of public offerings is teasing investors who expect the IPO window will re-open in the coming year.’
The $7.3bn generated by mergers and acquisitions (M&As) in the fourth quarter of 2009 is a 49 per cent increase from the $4.9bn raised in the same period of 2008. However, M&A transactions garnered a total of $16.2bn in 2009, falling short of the $25.6bn raised in 2008.
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