In Silicon Valley, market-watchers are looking to digital media in its many forms — social networks, tablet apps, user-generated content — to revive the IPO market. That’s why there’s so much buzz about Zynga and Facebook as IPO candidates. But there’s a smarter bet for investors: e-commerce.

Don’t scoff. Sure, after the dotcom bomb, e-commerce had a stench from Pets.com, Webvan, and other expensive duds. But savvy investors who looked past those failures and embraced true innovation have put hundreds of millions of dollars into rising stars. From Groupon to Etsy and FreshDirect to Diapers.com, a cunning new breed of e-commerce players should be ready to test the public markets soon.

Here’s one way to think about it. In the free, ad-supported media world, people spend their time to save money. In e-commerce, people spend their money to save time. Which business would you rather be in?

Amid the buzz over the future of media, this development is getting short shrift. Take, for example, Wired editor-in-chief Chris Anderson, who recently claimed that “the Web is dead” — an argument-provoking, apps-enthralled piffle which was rapidly revealed as ill-thought-out nonsense, supported by fudged infographics and tendentious reasoning. But one of his caveats contains hidden wisdom: “E-commerce continues to thrive on the Web.” Yes, e-commerce got?seven words out of a magazine cover story.

It’s natural for journalists to obsess about the media business. But while the advertising business has gone through wild gyrations as it moves online and grows ever more efficient, online shopping has continued to grow apace. In mature markets like America, the sector has posted respectable growth numbers through a recession, while in emerging markets like China, it’s growing like wildfire — up 60 percent year-over-year in the first six months of 2010.

One other reason why e-commerce startups could stand out: They’re relatively easy for analysts and investors to understand. And with all the inefficiencies of traditional retail, there’s plenty of ground for socially networked, Internet-driven innovators to seize.

FreshDirect, an online-grocery delivery company based on Long Island, is a household name in New York. It also has an experienced Internet hand, former Priceline CEO Richard Braddock, at the helm. He’s looking to raise money, either privately or through an IPO, to expand FreshDirect nationwide.

Groupon, the social-buying startup which offers deals on local businesses to groups of users who band together online, mixes elements of social networking, local advertising, and e-commerce. It’s on an international shopping spree, like eBay in the late ’90s, to establish itself as a global brand. That acquisitive expansion could let it post the kind of growth numbers technology investors like to see.

Quidsi, the parent company of the self-evidently named Diapers.com, has expanded into all kinds of daily necessities through the launch of Soap.com. Like Zappos did in shoes, it has shown that Amazon.com is not invulnerable. (And, like Zappos, it could make an attractive acquisition target.)

Gilt Groupe, One Kings Lane, and similar flash-sales sites are bringing luxury brands and new designers to the Web through clever marketing and merchandising. Cordarounds maker Betabrand and the newly launched Saboteur are showing how fashion startups can bypass traditional channels to sell their own wares directly. And Etsy, which lets small handicrafts makers market their own wares, is riding the popularity of the customer co-creation trend, where marketplaces harness the creativity of their users.

While the media world faces a set of tough choices — figure out how to survive the information glut of the open Web, or give up control to closed platforms like Facebook or Apple’s App Store — e-commerce, inheriting the healthily chaotic traditions of the bazaar, is quietly thriving. It’s time investors started putting these companies on their shopping list.

The $30.5 billion that new issues raised globally in July was the most since November 2007 and exceeded the amount raised by follow-on issues for the month. Follow-ons, which were led by Mizuho Financial Group Inc and INPEX Corp in Japan, raised a total of $30.4 billion in July.

That was a turnaround from 2009, when IPOs for the most part were dwarfed by secondary offerings, many of them by banks under pressure from regulators to raise capital.

Year-to-date fees from the new issues, buoyed by Agricultural Bank of China’s $20.8 billion IPO and the UK’s $1.04 billion Vallar Plc IPO, reached $3.7 billion. That is more than five times the $706 million of fees banks reaped in the first seven months of 2009.

Including IPOs, follow-ons and convertibles, the No. 1 ranked underwriting bank, year to date on a global basis, is JPMorgan Chase & Co. JPMorgan has underwritten 185 deals worth $35.32 billion. Goldman Sachs Group Inc is in the No. 2 position with 128 deals worth $31.03 billion, and Morgan Stanley is No. 3, with 143 deals worth $25.49 billion.

The growing number of potential stock offerings illustrates what appears to be a renewed optimism in the capital markets, even though some companies that have already registered remain nervous about a market downturn. If trading volatility eases in the coming months, there could be a bevy of new companies coming to market, reminiscent of the boom times in 2007.

Ernst & Young reports that 113 companies took steps in the second quarter toward holding stock offerings, up from 80 in the first quarter. These 113 companies are seeking to raise $25.3 billion, up 41 percent from the previous quarter. The vast majority of the volume, about 80 percent, consisted of companies that newly registered their stock for initial public offerings with the Securities and Exchange Commission, as opposed to secondary offerings.

“The resurgence of pipeline activity represents optimism about the growth of the economy and the markets,” Maria Pinelli, the Americans director of Ernst & Young’s strategic growth markets division, said in a report. “Renewed interest from foreign growth companies, including Chinese companies, also demonstrates the attractiveness of U.S. markets globally.”

There were a number of big companies that announced their intentions to go public, most notably HCA, the health care company, which was taken private in 2006 in a leveraged buyout. The company’s planned $4.1 billion offering surpasses the total dollars sought by the 22 companies in the technology sector through new stock offerings.

Two other billion-dollar deals that entered the pipeline in the second quarter were Nielsen Holdings, which is seeking $1.75 billion, and Kaslion Acquisitions of the Netherlands, now known as NXP Semiconductors, which is seeking $1.15 billion.

But a number of initial public offerings were pulled in the second quarter, leading to just 37 companies to hit the market. The skittishness came as financial markets worried about the European sovereign debt crisis. But that may be turning. The global I.P.O. market was up 18 percent in July from June, the highest level in 2010 since March, according to Thomson Reuters. The backlog in the I.P.O. pipeline could rush out in the coming weeks, providing those companies with new money and giving bankers those lucrative underwriting fees.

London (Business Review Europe) | Since its launch in 1995, AIM, the London Stock Exchange’s market for small and growing companies, has helped thousands of ambitious companies raise the capital they need to fund their expansion and development. AIM has become a magnet for enterprise, attracting dynamic companies from around the world. AIM’s success has helped position London as the world’s capital market, where international companies seek to benefit from London’s core strengths; our international focus; our high standards of regulation; and the deep pools of capital available.

AIM, remains the only growth market in the world with the critical mass to provide firms from a wide range of countries and sectors with access to capital throughout their life on the market. While global IPO markets are currently quiet, AIM is very much open for business, allowing companies to continue to raise significant sums of money.

It is one of AIM’s strengths that unlike other growth markets it is not simply a market for raising money at IPO. Once quoted, AIM companies can return to the market to access further funds, to help them continue to develop and grow their business.

Many of AIM’s 400-odd energy companies featured prominently on the list of firms conducting further issues last year. Firms such as Dominion Petroleum, Afren and Peter Hambro Mining [now Petropavlovsk] all raised in excess of £50 million on AIM in 2009, the latter now having moved to the Main Market. The fact that in total in 2009 AIM companies succeeded in raising over £4.7 billion through further issues demonstrates how interest in small and mid cap companies among London’s unrivalled suite of small cap investors remains strong.

The list of companies raising money through further issues in 2009 demonstrates the unrivalled diversity of the investors and analysts who make up the AIM community, who last year supported fundraisings from over 80 different sectors. The market has always welcomed companies from a broad range of industries, from energy companies to medical solutions firms. This sectoral diversity remains one of AIM’s strengths and has helped the market to survive market conditions which have historically seen other growth markets fail.

With London a leading financial centre for global natural resources companies it should come as no surprise that mining and oil and gas today remain the two largest sectors by market capitalisation on AIM, worth £8.5 billion and £8.2 billion respectively. However, the list of companies joining AIM, and the market’s make-up often shifts naturally towards new sectors that are also in demand with investors. Cleantech, for instance, has gained significant attention over the last few years.

Driven by strong fundamentals, including high energy demand, the clean energy sector has attracted multi-billion investments globally. Although public market activity for cleantech companies is still in its infancy, there are now around 100 cleantech firms on AIM, including companies such as Clipper Windpower and Renesola. Last year FTSE introduced new indices – including the FTSE Environmental Opportunities UK AIM Index – designed to help investors identify and again exposure to firms in the renewable energy sector.

Whichever sector or AIM company investors choose to back, their investment in AIM is one in the real economy, with over 1000 UK-incorporated AIM companies today alone employing around 255,000 people. Over the coming years investors in AIM can look forward to yet more innovative firms coming to market. Despite the global new issues market remaining subdued, arrivals last year such as India Energy, Max Property Group and Better Capital, are testament to the market’s continuing attractiveness to new companies. The pipeline of companies with exciting growth stories and seeking a flotation in London remains strong.

Another trend that looks set to continue over the coming year is that of AIM companies moving to the Main Market as the next logical step in their growth. The miner Centamin Egypt was one of 9 companies to transfer from AIM to the Main Market in 2009, having successfully grown from a market capitalisation of £21.5 million on admission to AIM in 2001 to over £1 billion today.

One of the key reasons why AIM companies such as Centamin are able to flourish and grow is the market’s unique regulatory system. AIM’s regulatory framework is based on balancing the needs of growing companies with appropriate levels of investor protection.

The Exchange is not standing still in its efforts to promote the benefits of AIM and help companies make the most of their AIM quotation. One area where we’ve been focussing our attention is urging the Government to give Venture Capital Trusts greater freedom in the investments they make in smaller quoted companies.

We are pleased that it was announced in the last Budget that the Government will consult on allowing AIM shares to be eligible for inclusion in ISAs and modifying the Venture Capital Trust rules. These very promising signs reflect the constructive dialogue we and others, have been engaged in with Government departments , and we are delighted at the increased recognition among policy makers of the importance of SMEs to economic growth.

The importance of extending visibility and developing liquidity has undoubtedly increased as companies have experienced depressed valuations. We are in regular dialogue with companies, through forums such as our recent programme of regional roadshows, to ensure that we are providing them with the tools they need to help them communicate with investors. For instance we’ve been encouraging the wider take-up of equity research, having supported the launch of an additional research service – PSQ Analytics, which recently published a research report on the renewable energy sector, profiling AIM’s cleantech companies.

We are also working closely with the Market Making community to develop greater liquidity in AIM and Main Market securities. Having already introduced market maker trading incentives, we are continuing to ensure that companies are traded on the optimal service and have transferred a number of companies from our SETS electronic order-driven service to SETSqx, a hybrid model which combines the existing market maker quote-driven model with orderdriven functionality.

Looking to the future, the Exchange is committed to providing small and medium-sized companies in the UK and abroad with the capital they need for expansion. The fundamentals of AIM remain strong and I firmly believe that the market’s structure, specially designed to meet the needs of small and mediumsized companies, will continue to create a compelling offering.

London (dofonline) | AIM has been perceived to be in the doldrums of late.

However, with the markets (slowly) re opening following the global recession, activity on AIM is increasing, more quickly than activity on the main market.

In common with stock markets globally, the last two years have seen a dramatic fall in investment activity on the AIM Market.

IPO activity, in particular, has been extremely subdued, with investors being cautious and slow to invest, and where investments have been made, these have tended to be at the conservative end of the risk scale, with investors reluctant to commit to investments with a more varied risk profile.

More recently, we have seen something of a change in investor sentiment. Investors seem now to be emerging with a far stronger appetite for new deals, across the spectrum.

Investors and the funds they represent have seen little investment activity for almost two years and it’s understandable that, with renewed confidence, rising markets and greater stability, investors wish to put their funds to work again. This evidence is reflected in the increase in fundraising activity on the AIM market, as well as an increasing flow of announced IPOs.

AIM is not appropriate for all companies – it is not for the desperate, its not an easy option or an alternative of last resort.

It is, however, the most attractive of the available alternatives for businesses that fit the market – small to medium sized businesses (not start up or very early stage) with strong growth potential seeking access to institutional capital.

With strategic lending by banks continuing to prove elusive, and private equity/venture capital funding still patchy (except for very large transactions), AIM continues to represent an attractive option for companies seeking to raise finance.

Once listed, AIM provides a company with access to one of the deepest pools of institutional capital of any market, with follow on fundraisings being straightforward, cost effective and quick (can be done in a week), with no further approval, filing, or registration requirement, a simple process – a key attraction for a growth company.

AIM has also proved to be a viable intermediate step to a listing on the official list of the London Stock Exchange.

Three companies in May 2010 ‘stepped up’, including Sportingbet plc and Great Eastern Energy Corporation Limited.

An increasing pipeline of IPOs is now in train, with companies from a broad range of sectors and jurisdictions set to join AIM, taking advantage of a return of investor appetite. The amount of funds being raised on AIM is rising strongly again.

$8.8 billion was raised across the whole of 2009, a 25% increase over 2008, and the fourth highest amount ever raised since AIM was formed.

Follow on fundraisings, for which AIM is renowned, increased by nearly 50% in 2009 compared to 2008 and the AIM All Share Index has risen by 75% from its low in 2009.

27 new companies joined AIM in the first 4 months of 2010, raising a total of approximately £325 million.

Over £1.5 billion has been raised in the year to date by existing AIM companies, with £426 million raised in May alone.

King & Spalding see 2010 as a year of significant opportunity as the markets stabilise. We would be happy to discuss a possible AIM strategy for your company

The group is currently listed on the Alternative Investment Market, the junior exchange, and is in the middle of a dual flotation on the Toronto board. However, it is looking at a London promotion as it gets closer to permission to start production at Rio Tinto, which could be worth $200m a year in revenue from the end of 2011.

Emed’s finance director, John Leach, said: “Moving to the main board is on the agenda and we will evaluate later in the year. It’s not a bad idea. I think it’s a natural for us.”

The Toronto listing has been designed to get company shares into the hands of more retail investors. About 80 per cent of the company is owned by just two-dozen shareholders.

Emed will put its final technical plan for the development of the mine to Spanish officials this week.

Shares in the company are likely to begin trading on Wednesday, valuing Ocado at about £800m, after management meetings with investors in Amsterdam and London today and tomorrow. It is thought that Ocado, which delivers Waitrose food to online customers, still hopes to hit the upper end of the IPO range of £1.1bn, but has accepted that getting the deal away in choppy markets will be a success.

The listing, which is being managed by Goldman Sachs and JP Morgan Cazenove, has been dogged by what one source described as a “wall of negative comment”. A number of analysts have questioned the group’s funding, the sustainability of its business model, and the incentives that are likely to be offered to management.

It also emerged at the weekend that Ocado’s bankers have warned the groupthat the take-up of shares by its own customers, an offer that closed last night, is likely to disappoint. The group had hoped to raise as much as £50m from clients, but is now likely to have to settle for closer to £10m.

Ocado has never made a per-tax profit during its 10-year history and its IPO plans have attracted scorn from a number of analysts who argue that the group’s projected valuation is hugely over-estimated. Last Friday, Dave McCarthy, an analyst at Evolution Securities, said: “There are indications that the business model may be flawed in that it requires a lot more capex and scale before it makes a good return. But the addition of this extra capacity puts extra costs on the business which pushes the break-even point out further. Meanwhile, Ocado will have to face its biggest competitor in Waitrose as it enters the market. Waitrose and Ocado will be fishing in the same market niche.

“Investors should be wary of growth projections that cover the entire market,” Mr McCarthy added. “Ocado is not a mass-market player the way that Tesco is and is much more in line with the Waitrose position.”

Ocado hit back yesterday, arguing that Mr McCarthy’s analysis failed to note that the group has a £100m capital expenditure facility at its disposal. “We have great respect for Dave as an analyst but his latest note on Ocado seems to ignore the fact that we have a £100m capex facility – which is clearly explained in the IPO prospectus,” a spokesman said. “Post-IPO, Ocado will have adequate funds to give substantial headroom to a working-capital forecast for two years but also sufficient funding to build fully CFC2 [a new distribution centre] to £1bn in sales capacity. We have no expectation of further funding.” No reference was made to the competitive threat presented by Waitrose.

Rival experts at both Goldman and JP Morgan have pointed to Ocado’s advantages, including its “superior” offer to customers. They argue that the group will be profitable by the end of next year. It is thought that a trip to the US to meet specialist technology investors has also steadied any management nerves after they received widespread support.

Regardless of the merits of Ocado, the timing of the IPO has also raised questions. Volatile markets last week ended the hopes of a listing by Fairfield Energy, the North Sea oil and gas-exploration group , which abandoned plans for a £325m float. The pipeline for new listings is also thought to be thin.

Groups such as the airline-ticketing outfit Travelport and Legoland owner Merlin Entertainment, which are both private equity backed, earlier this year pulled plans to list after receiving only lukewarm support.

These freshly minted public companies cover a broad spectrum of industries, from the high tech smart board company SMART Tech to old school coal producer Oxford Resources Partners. There’s even a relisting of a private equity pioneer thrown in for good measure.

But while the influx of offerings is good news for investment banks raking in fees and the companies themselves, investors haven’t done so well with IPOs in the past year. The Renaissance Capital IPO Index is down 3.5% year-to-date and delivered a negative return of 8.3% through the end of the second quarter.

In its quarterly analysis of the IPO market, Renaissance Capital noted conditions were returning “to more normalized issuance levels” with 60 new IPOs added to the index in the first half of 2010 alone. The best performance was turned in by telecom companies and the worst performers were financial companies.

Independent IPO Analyst Francis Gaskins breaks down each offering coming to market this week, including two making their debut on Thursday). There are pros and cons for each company and the biggest isn’t necessarily the best. Investors should always ask themselves “Why is the company going public?”

The answer usually foretells whether it will be a good deal or not.

Read more at: http://www.thestreet.com/story/10807842/1/ipo-market-roars-back-to-life.html

I.P.O.s have always been a key exit strategy for venture capital funds, a path that was essentially closed off by the moribund stock market in much of 2008 and early 2009, Reuters reported.

The number of venture-backed I.P.O.s in the second quarter is the highest it has been since the fourth quarter of 2007, according to the survey. There were 17 venture-backed I.P.O.s worth $1.3 billion in the second quarter, which was the third consecutive quarterly increase in volume and the second in dollar amount.

The electric carmaker Tesla Motors, which raised $226 million, was the largest deal of the quarter and rose more than 40 percent in its debut.

But there are still signs of uncertainty. Only five of the 17 I.P.O.s in the second quarter were trading at or above their I.P.O. prices at the close of markets on Wednesday and the deal flow is still far below historic highs. There were 86 venture-backed I.P.O.s worth $10.33 billion in the fourth quarter of 2007, the most recent peak in the venture-backed I.P.O. market.

This week saw a bit of a renaissance for I.P.O.’s, with the most money raised since November 2009, according to data from Thomson Reuters. That brought up the total value raised to $7.7 billion so far this year, the best start since the comparable period in 2008 and up nearly threefold from 2009 levels.

This week’s results come after a drought in new issues, with only one company going to the I.P.O. market in the previous three weeks. The skittishness came as financial markets continued to worry about the European sovereign debt crisis. Dozens of companies have postponed or withdrawn their initial public offerings.

The backlog in the I.P.O. pipeline could rush out in the coming weeks, providing investors with new blood and giving bankers those lucrative underwriting fees.

So far, the performance of the latest I.P.O.’s has been mixed. Higher One Holdings, a financial company focused on college students, rose nearly 19 percent on its first day of trading, while Oasis Petroluem jumped 6.3 percent.

CBOE Holdings, the parent of the Chicago Board Options Exchange and one of the most anticipated stock offerings so far this year, jumped about 12 percent on its first day trading on Tuesday, but it has since given back about half of those gains.

Meanwhile, Motricity, a cellphone data-service provider that went public on Friday, is currently trading below its initial offering price of $10 a share, even after its price was cut 40 percent. And BroadSoft, a technology company, did not fare as well on its opening day, closing 8 percent below its $9-a-share offer price, where it remains on Friday.

The poor showings by Motricity and BroadSoft may be exceptions, but they are indicative of the tough market that awaits new issues.

About 400 registered initial public offerings are in the pipeline seeking to raise about $31 billion, according to Thomson Reuters data. Most of the deals are small, with only two deals seeking to raise more than $1 billion: HCA, the health care provider, at $4.6 billion, and NXP Semiconductors, at $1.15 billion.

Next week will see a bit of a slowdown, although at least two companies are hitting the market. Hudson Pacific Properties, a real estate investment trust that owns commercial property in California, will aim to raise $243.2 million. And Fabrinet, a designer and maker of optical materials, is seeking to raise $150 million. Fabrinet has been in the pipeline for three years now; it first tried to go public in 2007 when it was looking to raise $250 million.

Another stock offering that could attract investors the following week is Tesla Motors, the electric car company.

Meanwhile, investors are excited about two possible initial public offerings courtesy of the United States government: General Motors and the American International Group’s Asian life insurance unit, American International Assurance.

The G.M. stock offering, which the Treasury Department has said will not take place before the fourth quarter, could be a $15 billion deal, or half the total number of registered offerings in the pipeline.

An A.I.A. stock offering, which is being anticipated after talks to sell the insurer to Prudential of Britain failed earlier this month, could be an even bigger deal. A.I.G. had been trying to sell the Asian unit for for as much as $35.5 billion.