West Palm Beach (HedgeCo.Net)- According to a survey of leading IPO attorneys by Gavin Anderson & Company, respondents generally dismissed the idea that shareholder activism by hedge funds and other institutional investors made U.S. markets less attractive for issuers.

Gavin Anderson & Company, an international financial- communications advisory firm, interviewed U.S. attorneys who represented issuers on almost $11 billion of U.S. initial public offerings last year, including some of the year’s largest transactions. They said the public is ”discouraged by the cost of meeting U.S. regulations and accounting standards, companies planning initial public offerings are likely to turn to overseas markets, threatening to further erode the market position of U.S. stock exchanges”

The survey, believed to be the first to formally assess opinions from IPO attorneys, found that nearly three-fourths of the respondents said that the U.S. share of global IPOs is likely to decrease, absent any changes in the U.S. regulatory environment.

“There’s no question that the cost burdens of going public in the U.S. can be significant, particularly for smaller companies,” said Michael Littenberg, an attorney with Schulte Roth & Zabel who participated in the survey. “It’s a major undertaking for many companies to develop the accounting and compliance infrastructure to meet U.S. public company obligations.”

European exchanges have increased their share of global IPOs by more than 30% since 2001, according to the January 2007 report on U.S. financial market competitiveness prepared by McKinsey & Company for Mayor Michael Bloomberg and Senator Charles Schumer. The report added that for IPOs of $1 billion or more, U.S. exchanges attracted just 16% of such deals through the first ten months of 2006, compared with 57% in 2001.

An initial public offering (IPO) is the first sale of a corporations common shares to investors on a public stock exchange. The main purpose of an IPO is to raise capital for the corporation, and while IPOs are effective at raising capital, being listed on a stock exchange imposes heavy regulatory compliance and reporting requirements.

However, survey respondents were optimistic that the U.S. regulatory environment for issuers would improve. More than two-thirds expect a loosening of regulatory requirements.

Alex Akesson

Editor
HedgeCo.Net
Email: Alex@hedgeco.net