Firms Gravitate To Remote IPOs For Cost And Time Savings

Is the “virtual” initial public offering (IPO) here to stay?

At a time when the coronavirus fallout has dashed the dreams of some entrepreneurs, virtual IPOs have offered an attractive alternative to young companies eager to go public.

Weeks-long roadshows are compressed into a few hours on Zoom, while listing ceremonies and — in the case at least of the Shanghai Stock Exchange, the ringing of the stock market bell as well — are being done virtually.

Now some industry observers are asking whether the virtual IPO may potentially outlive the coronavirus crisis that spawned it, with a growing number of companies embracing the efficiencies of the new process.

Fabiane Goldstein, a founding partner of InspIR Group, points to a growing number of successful virtual IPOs in the United States as well as China in a recent piece in IR Magazine.

“As human beings adapt to new landscapes and unanticipated circumstances, we must remember the essence of human connection: the basic desire for close relations,” Goldstein writes. “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.”

In the meantime, the number of successful virtual IPOs, including virtual roadshows, are growing by the week.

Car marketplace Vroom, Warner Music and JDE Peet’s, the java company, are among the newly publicly traded firms that did virtual road shows, PitchBook notes.

And instead of a two-week marathon that is the traditional roadshow, a virtual roadshow can take just a few days or a few hours, experts say.

“The benefits are obviously avoiding traveling around the world, but also the fact that it can be a faster and more efficient way to reach more investors,” Andreas Bernstorff, head of equity capital markets at BNP Parabas, told PitchBook.

The results so far have been encouraging, with investors in some cases showing a heightened interest in virtual IPOs.

Zentalis Pharmaceuticals, the first virtual IPO in the U.S. back in April, and Norwegian videoconferencing software firm Pexip, which went public in May, are among the success stories, Goldstein writes of in IR Magazine.