Either way, talk of an IPO should be very helpful to Pepperstone’s business.
On a personal note, those of you who know me may have also known me in my previous life as an IPO banker for Robertson Stephens and Bear Stearns, helping growing technology-based companies take that first important step.
And there was one thing common to (virtually) every first meeting with one of our potential IPO about-to-go-public company clients – both we and our client would give each other the same friendly warning – word of an IPO can absolutely NOT leak out.
There are several good reasons why pre-IPO talk is generally frowned upon by both companies and their underwriter advisors. One is regulatory. Regulators, who need to approve the IPO prospectus before allowing the company to sell shares to the public, do not like pre-IPO hype, or statements such as “we’ve also had lots of takeover offers” bandied about by the company. Regulators – particularly the SEC in the US – have been known to delay their approval of an IPO if there’s too much such talk about the IPO going on.
The other reason to keep things quiet is strategic. If a company starts hyping its about-to-come IPO and then nothing happens, company management has to start dealing with employees’ expectations, clients’ expectations, and a general is-something-wrong, why-has-this-not-happened-yet environment. As the WWII saying goes, loose lips sink ships.
So one has to wonder, what is Pepperstone CEO Owen Kerr doing giving interviews to the Wall Street Journal, talking exactly about these issues??? The WSJ quoted Kerr as saying that Pepperstone had received multiple takeover offers (all of which were rejected), and that Pepperstone had engaged US investment bank Berkshire Capital to advise the company on strategic options, including a sale or initial public offering.
The answer, of course, is that in the retail FX industry any news (within reason) is good news. And people love talking about IPOs (as we’re proving here with this post!). Either way, Mr. Kerr and Pepperstone come out ahead. Even if an IPO does not go ahead in the near future Mr. Kerr has smartly positioned Pepperstone as an IPO-worthy company, which should help in the important job of building trust with clients.
An IPO is certainly not out of the question for Pepperstone. After a nearly three year hiatus since FXCM and Gain Capital went public in December 2010, Hong Kong retail forex broker KVB Kunlun priced its IPO in July followed soon thereafter by Isreal-based CFD Plus500. KVB stock has floundered somewhat, but Plus500 has seen its shares soar by about 45% since going public.
And Pepperstone, as the second largest Australia-based retail forex broker (behind Australia market leader AxiTrader) is roughly the same size as Plus500.
Stay tuned to LeapRate. Should be an interesting ride….
For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.