Venture capital-backed companies planning an initial public offering were delivered a further blow yesterday when a number of new listings, including that of Prudential's online bank Egg, were either postponed or delayed indefinitely. One Egg adviser told the Financial Times: “You couldn't choose a worse week to float.”
Egg was joined by telecoms businesses TeleCity, Direct Message and Project Telecom on the pre-IPO bench, as European and US investors made it clear they were not finished punishing tech-related stocks. The American NASDAQ tumbled 5.9% during trading yesterday, after watching the London techMARK index fall 49% below its March high. Continental hi-tech indexes recovered slightly during the day, perhaps explaining LetsBuyIt.com's decision to press ahead with its IPO on Germany's Neuer Markt despite current investor hostility towards business-to-consumer Internet companies.
Some observers are saying the new issues market, particularly in the UK, is collapsing. Michael Bourne, a partner at Reabourne, the fund management advisor, told The Wall Street Journal Europe that IPO market is dead until at least later in the summer. Meanwhile, one banker told The Daily Telegraph in London that fund managers were just not writing cheques any more for new stock offerings. The bad news for VCs and their portfolio companies looks set to continue.