Nasdaq Set to Beat NYSE in IPOs for First Time Since Facebook Debacle

Date : 12/11/2019 @ 10:59AM
Source : Dow Jones News
Stock : Intercontinental Exchange Inc (ICE)
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Nasdaq Set to Beat NYSE in IPOs for First Time Since Facebook Debacle

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By Alexander Osipovich 

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 $32.4 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 is expected to grow on Wednesday with the debut of Brazilian brokerage XP Inc., which aims to raise as much as $2.1 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 in other large deals.

Of the IPOs that have raised at least $500 million this year through Tuesday morning, Nasdaq and NYSE won 11 each, according to Dealogic. The last time Nasdaq matched NYSE by that measure was 2000, the peak of the dot-com bubble, Dealogic data shows.

Mr. Tuttle added that NYSE 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 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.

Nelson Griggs, executive vice president for corporate services at 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 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


(END) Dow Jones Newswires

December 11, 2019 05:44 ET (10:44 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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