NEW YORK (AFX) - Nineteen venture-backed companies raised a total of $2 billion through initial public offerings on U.S. exchanges in the second quarter, according to data published Wednesday by the National Venture Capital Association and Thomson Financial.
The total is a big increase from the $714 million raised by 10 companies in the second quarter of last year and from the $540.8 million raised by 10 companies in the first quarter this year.
The technology sector accounted for the most IPOs -- eight companies raised a total of $1.4 billion in the quarter, topped by the $531 million offering from Vonage Holdings Corp.
Despite the growth, experts say that venture-backed companies remain wary of the public markets as a viable exit option compared with acquisitions, buyout rounds and foreign exchanges.
'Many emerging companies just can't afford the costs associated with going public in the U.S., particularly since Sarbanes-Oxley kicked in a few years ago,' said Mark Heesen, president of the NVCA, the industry's trade body.
He was referring to the Sarbanes-Oxley corporate-governance act. Small companies have said the rules are too costly, making them pay for a variety of things such as new software and additional accounting work.
And while companies that went public during the second quarter also enjoyed larger offering sizes and post-offering values than they did 18 months ago, the volatility of the last couple of weeks has made for some disappointing stock prices.
'We would normally expect at least 75 percent of venture-backed companies that go public to be trading above their offering price,' said Heesen. 'For the rolling 12 month period ending June 30, 2006, this applies to just 52 percent of companies.'
Vonage, in particular, didn't do as well as expected, he added. Earlier Wednesday, shares of the New Jersey-based digital telephone company closed at $8.27, down 51 percent from the offer price of $17 on May 24.
Some U.S. venture-backed companies are looking to foreign exchanges to list: In the second quarter, two companies went public on the London AIM exchange and one company went public on the London Stock Exchange, the report showed.
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