Over the last 6 months or so a new vintage of Internet IPOs has generated a lot of publicity. Chinese Internet companies and social media companies are going public in droves. LinkedIn probably being the most significant among them. In most cases the valuation of these new ventures is quite lofty and reminds of the dot-com buble that ended with a crash in 2000. Yesterday a social gaming company called Zynga has made some moves to file for an IPO soon. Social network Facebook and the e-commerce v enture Groupon are also expected to go public soon.
Clients of private banks are often offered IPO shares or investments in so called pre-IPO vehicles. Goldman Sachs has done just this for some of his clients with Facebook shares. Some private banks can do this as they have close relationships to their investment banking divisions or venture investment organizations.This is especially the case for large, integrated players like UBS, Credit Suisse, Deutsche Bank, Goldman and others.Often these special offers are used for client retention and are used as special “goodies”.
But is it a good idea for private investors to invest in such risky new companies during or even before an IPO? MyPrivateBanking research has undertaken a thorough analysis of the most catastrophic IPOs during the dot-com buble and compares them with today’s new vintage of Internet IPOs. The result is quite shocking - it shows that almost exactly the same banks and IPO underwriters who caused the stock market crash 10 years ago are now doing the same thing all over again. The report will be online soon and will be available for download on our main website.