The initial public offering [IPO] of US-based consumer identity security company Lifelock last week brought an end to the latest drought in corporate venturing-backed flotations. There were no corporate-backed flotations in the US tracked by Global Corporate Venturing in the third quarter of 2012.
Lifelock is backed by internet security provider Symantec (which held an 8.3% holding prior to IPO) and investment bank Goldman Sachs (which owned 11.5%, and acted as “lead left” underwriter on the flotation).
The last initial public offering backed by a corporate we tracked was of US-based cancer treatment company Tesaro in late June. Tesaro was backed by healthcare-focused investment bank Leerink Swann, among other investors.
Of course, other venture-backed companies have made it out into the market, with US-based trade body National Venture Capital Association and Thomson Reuters saying 10 venture-backed flotations priced in the third quarter worth $1.1bn.
The identity security company has not performed well since listing, however. On Friday’s close it was trading at $7.32 per share, down 18.7% against its Wednesday flotation price of $9 per share when $141.3m was raised.
Yet this does not seem to be affecting the prospect of more corporate venturing-backed IPOs coming to market. Human resource software provider Workday, backed by electronics designer Flextronics, is expected to float this week in the largest IPO since that of social network Facebook in May.
News provider Financial Times wrote a very good profile of the Workday founder Dave Duffield on Saturday and check out our related content (see below) for the Global Corporate Venturing editorial on how his background and animus is part of the Silicon Valley culture.
The poor aftermarket performance of Facebook’s flotation in May has been much discussed, and blamed by many as one of the key albatrosses currently stifling the IPO market.As Pavel Durov, Russia-based social network VKontakte’s founder and co-owner, tweeted in May that: “No IPO is being planned. Facebook’s IPO has destroyed the trust of many individual investors in social networks, so [our] IPO is postponed indefinitely.”
Yet there are definite signs the chill caused by poor trading post-flotation of Facebook and other internet darlings like gaming company Zynga and discounting company Groupon, have only temporarily knocked the market and the temperature is rising in other areas.
Longer-term, the health of the global and local economies is more important and provided there is no double-dip recession, there will continue to be firms that turn to public market for capital and an exit route for investors (or just publicity to attract corporate buyers).
Be braced for Workday, or another IPO (we know of a few under F1 filing), to pop, to see the market heat up again. Until, of course, investors are sold another extraordinarily over-priced listing as the cycle continues.