Everyone seems to have a bone to pick about IPOs. Companies and owners think the banks price IPOs too low, allowing the stock to “pop” on the first day of trading and delivering a windfall for big asset managers. Investors fret about their informational disadvantage to company insiders, and that banks care more about earning underwriting fees than quality of offering. Retail participants believe that banks stiff-arm them on the attractive IPOs and stuff them with the bad deals. Even when they go well, IPOs can generate recriminations from all sides.
It’s not surprising therefore that over the years different parties have tried to improve the IPO process. The perception is — correctly or not — that looking after company clients will create conflicts of interest for investment clients, or vice versa.
This debate is at the heart of Dakin Campbell’s new book, Going Public: How Silicon Valley Rebels Loosed Wall Street’s Grip on the IPO and Sparked a Revolution. US technology entrepreneurs have been among the most vocal critics of the IPO process, and have championed initiatives to effectively limit the banks’ power over pricing and allocation. Campbell chronicles these efforts, such as Spotify’s 2018 direct listing.