A few US tech companies have taken hefty valuation haircuts to revive IPO plans. Want to float on the ASX? Take note.
, floated with a $US54.5 billion valuation, even though its owner Softbank bought back a 25 per cent stake at a $US64 billion valuation only last month., which is about a 75 per cent haircut on a $US39 billion valuation secured in a March 2021 funding round, and below valuation markers set in three separate raisings in 2020, to be pretty much back to where it was when it raised five years ago in November 2018.
So, existing investors need to take a hit. If they IPO at a discount to the 2021 funding round, that means writing back the value of their investment . Obviously, that hurts returns, hits fund IRRs and leaves some bruised egos in the venture capital world.Could that happen in Australia? It is hard to see it. The local venture capital market is highly concentrated, dominated by a handful of big funds mostly bankrolled by a similar group of underlying investors.
Remember, the big haircuts are paper losses only, just as the write-ups were paper gains. None of it is money in investors’ bank accounts. And it is only really the latecomers that tipped into the 2020 and 2021-era raisings losing actual money, most investors would have got in at much lower valuations in seed and early stage rounds years ago.
Raimond Coneliano’s Redox is on the only Australian IPO to raise more than $100 million to list this year. Its shares last closed at $2.42 vs a $2.55 listing price.But these funds are fishing around in a seriously bombed out market. Australia’s Small Ordinaries index is trading at its lowest level relative to the benchmark SP/ASX 200 since September 2015, according to stockbroker Richard Coppleson. Small and micro caps have had a tough few years.
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