(Reuters) – With a storied history and a high profile name, the New York Stock Exchange has long been the place to go with a big initial public offering.
But with rival Nasdaq OMX Group (NDAQ.O) stepping up efforts to snag companies beyond its traditional niche of smaller firms and directly taking on the NYSE for large listings [[ID: nN27341668]], the Big Board’s recent moves to ease listing thresholds will help it draw more IPOs by new technology companies, the head of listings at NYSE Euronext Inc (NYX.N), NYSE’s parent, said in an interview on Friday.
“We have a new standard on the NYSE … that will allow most of the emerging growth companies to list on the NYSE,” Scott Cutler, who manages listings for the Americas, told Reuters.
Cutler estimated that about 70 percent of IPO candidates could now be eligible for a NYSE listing, as opposed to 30 percent under previous standards.
The new standards, approved by the U.S. Securities and Exchange Commission late last year, give companies more ways to qualify for a NYSE listing.
For example, companies in sectors such as biotechnology or clean technology that did not have sales large enough to meet previous requirements might now qualify if they have sufficient assets.
The Nasdaq and NYSE have been scrambling to drum up IPO business, and the fees and prestige they bring, in the worst IPO market in 5 years. Listing and transactions fees make up between 10 percent and 15 percent of the exchanges’ revenues.
There have only been two IPOs in the past seven months, including an $828 million IPO in February by pediatric nutrition maker Mead Johnson Nutrition Co (MJN.N) on the Big Board that was a spin-off by drug company Bristol Myers Squibb Co (BMY.N).
But Mead Johnson’s success has hardly reopened the market — there has not been a new IPO filing in the United States in six weeks and no deals are scheduled for pricing.
To be sure, NYSE remains a draw, particularly for large IPOs. Of the IPOs in the pipeline, 39 are aiming for a NYSE listing, with estimated proceeds of $12.2 billion, nearly twice as much as the 41 that have applied to list on Nasdaq, according to Thomson Reuters data.
To help nudge the pipeline, Cutler, who joined the NYSE in 2006 after a career as a technology investment banker in Silicon Valley, said the exchange was working with venture capitalists to figure out ways to make venture-backed companies more attractive to investors again.
“There is a desperation in their own voices about their business model and the simple fact is that it will take longer to build a public company (now),” Cutler said of venture capitalists, whose portfolio companies traditionally have been a major source of IPOs.
Last year saw only six IPOs by venture backed companies, compared with 86 in 2007.
Cutler said the NYSE is working actively with Inside Ventures, a service that matches investors with later-stage pre-IPO companies to tide those companies over until the IPO market returns.
And Cutler, who just returned from Latin America to promote NYSE listings, said foreign companies will remain a major source of new listings, dismissing the notion that the financial crisis has hurt the United States’ attractiveness.
“The U.S. is viewed as an incredible platform for liquidity and access to investors. A few years ago, there was a lot of resistance to Sarbanes-Oxley and now they view it as a good business practice,” said Cutler, referring to the corporate governance standards widely derided at the market peak as being onerous.
Last year, NYSE Euronext chief executive Duncan Niederauer called for a rethinking of the Sarbanes-Oxley law, saying it could be dissuading companies from a U.S. listing.
Still, Cutler said many problems still stand in the way of a meaningful IPO recovery.
For one, Cutler does not not think the federal government’s economic stimulus package will spur IPOs unless it helps restore confidence in the broader stock markets.
“After credit markets improve and there is less volatility, and there are a few good IPOs, you’ll see a quick return to an IPO window that will open like a floodgate,” Cutler added.
By Phil Wahba
(Editing by Andre Grenon)