By Alexander Osipovich
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (December 12, 2019).
Companies are on track to raise more money through initial
public offerings on Nasdaq Inc. this year than on the New York
Stock Exchange, the first time that has happened since 2012's
bungled Facebook Inc. offering.
So far this year, total funds raised in Nasdaq-listed IPOs have
been $34.4 billion, compared with $26.2 billion for IPOs at NYSE,
Dealogic data shows. NYSE, though, says it is ahead using a broader
measure of how much capital its companies have raised.
Nasdaq's tally grew on Wednesday with the debut of Brazilian
brokerage XP Inc., which raised nearly $2 billion in one of the
last big IPOs of the year.
Winning IPOs allows Nasdaq and NYSE parent Intercontinental
Exchange Inc. to collect more listing fees and boosts their trading
volumes, so they make more money from transaction fees, too.
Landing a big IPO also can enhance an exchange's brand, making it
easier for that exchange to attract more listings down the
road.
The two rival exchanges compete fiercely for companies going
public, wooing them with perks such as bell-ringings at NYSE's
historic building in lower Manhattan or the display of corporate
logos on Nasdaq's huge electronic billboard facing Times
Square.
NYSE representatives said the Big Board is ahead of Nasdaq this
year if measured by total capital raised. That metric includes not
just corporate IPOs but also listings of closed-end funds and
follow-on offerings, in which a company raises additional capital,
often by selling shares on the exchange where it is already
listed.
"The New York Stock Exchange remains by far the global leader in
capital raised, with over $100 billion in IPOs and follow-on
offerings in 2019," said John Tuttle, vice chairman and chief
commercial officer at NYSE.
NYSE won the two biggest IPOs of 2019, the $8.1 billion debut of
Uber Technologies Inc. and the $3.3 billion debut of chemicals
company Avantor Inc. But Nasdaq won the No. 3 listing: Uber rival
Lyft Inc., which raised $2.6 billion -- and fared better than usual
against NYSE in winning other large deals.
Of the IPOs that have raised at least $500 million so far this
year, Nasdaq has won 12 while NYSE has won 11, according to
Dealogic. If that holds through the end of December, this would be
the first year on record when Nasdaq beat NYSE in attracting IPOs
worth at least $500 million, Dealogic data shows.
"We've been on a mission to win larger deals," said Nelson
Griggs, executive vice president for corporate services at
Nasdaq.
Mr. Tuttle, of NYSE, added that his exchange is a pioneer in
direct listings, a process in which a company lets its shares float
on an exchange without raising new funds. Once little known, the
process gained attention after it was used by Spotify Technology SA
to go public on NYSE last year, followed by Slack Technologies Inc.
in June. Nasdaq has yet to do a significant direct listing, but it
offers the process and has been promoting it with prospective
issuers.
Nasdaq is typically the underdog when it comes to larger IPOs.
NYSE, founded in 1792, has historically been the home of blue-chip
stocks, and it leverages its prestige to attract companies, despite
generally charging higher listing fees than Nasdaq.
Nasdaq, founded in 1971, became synonymous with technology IPOs
in the 1980s and 1990s by listing companies such as Apple Inc. and
Amazon.com Inc.
But Nasdaq was hurt by missteps in the Facebook IPO of May 2012.
Glitches in the popular listing left brokers and traders confused
for hours about whether their orders had been executed, and the
incident weighed on Facebook's stock for months. Nasdaq paid tens
of millions of dollars in settlements with regulators and investors
over the incident.
The debacle upset banks that advise companies on IPOs,
undermining Nasdaq's efforts to win deals such as the $25 billion
debut of Alibaba Group Holding Ltd. in 2015, according to a new
memoir by Robert Greifeld, who was chief executive of Nasdaq at the
time.
Nasdaq lost that IPO because of "pressure from the banks and IPO
underwriters, many of whom were pushing big clients like Alibaba
toward NYSE, 'just to be safe,' " Mr. Greifeld wrote in the book
"Market Mover: Lessons From a Decade of Change at Nasdaq," released
in October.
Alibaba and Facebook didn't respond to requests for comment.
Mr. Griggs, of Nasdaq, said in an interview last week that the
exchange operator had worked to rebuild its relationship with the
banks. After 2012, Nasdaq also revamped its IPO process to ensure
that companies going public have more information about what is
happening with their stock, he said.
Today, the Facebook IPO has largely vanished from discussions
with companies planning to go public, said Patrick Healy, chief
executive of Issuer Network LLC, which advises companies on which
exchange to choose. "The Facebook cloud is gone," Mr. Healy said.
"It took a very long time."
Nasdaq benefited from a strong year for biotechnology IPOs,
where it has an edge because of its popular Nasdaq Biotechnology
Index, which includes all biotech companies on the exchange. That
means biotech companies going public on Nasdaq are included in
exchange-traded funds tied to the index, a potential way for more
investors to get into their stock.
In May, NYSE said it was reducing listing fees for companies
with little to no revenue, a move aimed at attracting biotech IPOs.
Still, Nasdaq won all 42 U.S. biotech IPOs so far this year,
totaling $4.8 billion in capital raised, Dealogic data shows.
In April, Nasdaq unveiled yet another perk for listed companies:
a new event space on the 10th floor of its building in Midtown
Manhattan, including a 2,100-square-foot terrace overlooking Times
Square, designed to host IPO parties and other events. It was
Nasdaq's answer to the lavish facilities for events at NYSE's
building downtown, which underwent a costly renovation several
years ago.
Write to Alexander Osipovich at
alexander.osipovich@dowjones.com
(END) Dow Jones Newswires
December 12, 2019 02:47 ET (07:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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