IPO Logjam Means Secondaries Log Flume
While the public-facing financial news can’t stop talking about SPACs, pre-IPO secondaries have institutional gums flapping, and check books opening.
Why? With so much dry powder available for hot companies, why not pump up valuations with ongoing private rounds, before letting the market get involved?
Chinese investors have been frothing for pre-IPO shares of SpaceX, Impossible Foods, and the like. On the other side of the ocean, investors are ready to snap up pre-IPO shares of Bytedance & JD Logistics, among other booming tech businesses.
So China’s recent tightening of regulatory screws, causing a huge backup of applications for Chinese companies to list (199 companies currently waiting to list on the STAR market), will only add impetus to the “wait and raise” attitude.
“This regulatory tightening is like a gift to the pre-IPO space,” says Jimmie Jeremejev. “I’ve little doubt that quite a few companies’ boards will decide to just wait and continue to offer private rounds, as a result. Our direct access to a lot of the LPs on these companies’ cap tables should be valuable for western investors looking to capitalize.”