IPOs rise to highest level since before recession -- Gazette.Net


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More companies have gone public in the first eight months this year than any similar period since pre-recession 2007, according to recent investment reports.

This week, Rockville biotech MacroGenics became the latest from Montgomery County to file a registration statement with the U.S. Securities and Exchange Commission, for a proposed initial public offering of up to $60 million. That move is among the initial steps in the IPO process.

From January through August, 131 companies nationally went public, up 44 percent from the same period in 2012 and the most since 139 in 2007, according to Greenwich, Conn.-based investment firm Renaissance Capital.

One Montgomery County-based company — Germantown biotech Intrexon Corp. — has gone public so far this year, the same number as last year, when Rockville-based Supernus Pharmaceuticals did so. MacroGenics would be the second this year, depending when and if the business follows through on the plan.

So far this year, 30 IPOs have been withdrawn nationally, according to Renaissance Capital.

No Frederick County business has gone public this year. Last year, one did — U.S. Silica Holdings.

Scott Koenig, president and CEO of MacroGenics, could not be reached for comment. An assistant with MacroGenics said executives could not comment beyond what is in the registration statement.

MacroGenics, which focuses on cancer treatments, had about $23 million in revenue in the first six months this year, down from $37.9 million in the first half of 2012, according to its registration statement. The company has received about $106 million in non-equity funding during the three years that ended June 30.

The increase in IPO activity is bolstered by an improving economy, stock market gains and “an increased appetite for risk among investors,” said Henri Leveque, who heads accounting and consulting giant PricewaterhouseCoopers’ domestic capital markets and accounting advisory services.

“We are also continuing to see a broadening of sectors represented in the IPO market, especially growth-related offerings in sectors that are well-positioned to capitalize on a recovering economy,” Leveque said. Technology and healthcare, which includes biotechs, are the two most active sectors.

Advantages and disadvantages

Being able to raise capital fast is a big reason many companies go public, according to recent reports on IPOs by PricewaterhouseCoopers and other firms. In August, Intrexon raised $160 million in its initial public offering and has seen its stock price rise from $21.10 on opening day to as high as $31.44. Its price was at $24.29 Thursday.

Another reason companies go public is to raise their public profile, which can draw more customers and high-quality employees.

Disadvantages include having to disclose more information to investors and the public, such as revenue and profit statements. There are also increased rules and regulations that are monitored by the SEC, along with higher costs to comply with regulations.

Sometimes, pressure from stockholders could cause company leaders to focus more on short-term results at the expense of the long run.

The control issue is a concern about going public, said Ben Landers, CEO of Gaithersburg Internet marketing company Blue Corona. The business has made Inc. magazine’s list of the fastest-growing private companies the past two years.

“I have thought about going public, but I worry that would force us to compromise what we’re trying to do,” Landers said.

Going public is an issue more for companies with a large national presence or those looking to acquire other businesses, said Bob Perini, founder of Gaithersburg bottled water company DrinkMore Water, who also helped found Blue Corona. “I like the family atmosphere that we have here,” he said.



kshay@gazette.net