The only thing on which companies and investors seem able to agree about initial public offerings is not to trust investment banks.
Peter Thiel, a Facebook director and Silicon Valley venture capitalist, told the Financial Times this week that bankers had “screwed up” the IPO of LinkedIn by setting the price too low, only for the shares to rise 109 per cent on their first day of trading. At the same time, BlackRock, the institutional investor, complained of banks pricing IPOs too high in the UK to amass fees.
Of the two complaints, I sympathise more with Mr Thiel’s – banks have a greater incentive to underprice IPOs than to overprice them – but both raise the same question. If banks are ill-treating issuers or investors in this way, why don’t the victims do something about it rather than moaning?