Despite the uncertainty and rapid spread of the novel coronavirus pandemic, the companies are still trying to tap public markets. However, there is a little change in the style of pitch execution. Instead of the facilitating days of Physical IPOs roadshows, they shifted to virtual IPOs roadshow maintaining social distance.
Whether you know or not, IPO is notorious for being a complex and exhaustive process. The IPO decision involves months of planning, great attention to the details, and a final seven-day trip to engage investor’s interest. And after that, when the distinct ringing of a bell at the stock exchange is heard, only then the company can breathe a sigh of relief. It is iconic and marks the start of a new publicly held corporation.
To know about a company that considered listing on a public market, read about Pexip. It is a software company specializing in video conferencing. By making the initial public offering virtually, it has set an example for companies who not only wish to list publicly in the future but also want to maintain social distancing amid the pandemic. The company started planning about the IPO process last year and had no idea they will lead the role of an initial public offering that soon. “The timing nevertheless turned out to be good for an IPO for us as the pandemic made the benefits of video communication extremely apparent,” says the company’s CFO Øystein Hem.
Key consideration for remote/virtual IPOs
Executing IPO from the office premises or home infrastructure—the process is quite the same. In the beginning, the team goes through the normal process. It includes learning about the lead bank, which is stabilizing and updating the underwriting and trading community, at the start of the price discovery process. The IPO day is such a special and historic event for a company that the data communication, price discovery process, and transparency are paramount. So, while protecting from the concern of coronavirus pandemic, the information is escalated through data feeds as well as through technology, available with all the member firms.
One of the important aspects of IPO planning is the ability to communicate the company’s vision to the community of investors. Typically, investor meetings take place across the country. But now, pivoting to virtual IPOs roadshows, the process has been brought down to some hours rather than a number of days. Nothing changes during the process. Normally, it also involved testing of systems and IPO processes every week from office, which has now shifted to teams doing it from home. There is no limit to where it can be operated, even the flexibility and execution protocol is the same.
Add to it, there is a frequent change of information such as current reference price, opening cross size, and imbalance data points. The company releases all such information via data feeds or through an innovative suite of IPO tools. Rendering the right amount of security and transparency, innovative desktop solutions are making the idea of virtual IPOs a complete success.
Though the pandemic is unexpected and unprecedented, nothing has brought any change to IPOs in 2020 process.
Result of rapid shift toward virtual IPOs
Despite the adversities, virtual IPOs have given an attractive alternate to start-ups and not-so-old companies who are eager to go public.
- Earlier, there were long IPO roadshows as sales presentations in different cities to talk about and give information about the initial public offering. However, they are compressed into a few hours on Zoom.
- The listing ceremonies of the Shanghai Stock Exchange and the ringing of the stock market bell can be done without traveling to places; therefore, it can be done virtually.
- Apart from avoiding travel, it is a faster and more efficient way to reach more and more investors based on their recent heightened interest in virtual IPOs.
Withstanding the loss
Nothing, except the void created due to lack of environment and office infrastructure, gives the right feel and inspiration to work.
And as far as longevity of the virtually connecting technologies is concerned, read this – “As human beings adapt to new landscapes and unanticipated circumstances, we must remember the essence of human connection: the basic desire for close relations,” said by Fabiane Goldstein, Founding Partner of InspiR Group, the powerhouse of various virtual IPOs “Only time will tell whether the work-from-home trend will be a transitory phase or we continue following a hybrid model of in-person and virtual work.”
So, it isn’t easy to understand whether the virtual IPO in 2020 is here to stay or not. Still, the efficiency, cost, and time-saving feature, and quick adoption in the business world give a hint on the domination of these Virtual IPOs Roadshows today and post-crisis.