A new electronic IPO bookbuilding process has received regulatory approval from the UK's Financial Conduct Authority (FCA). SquareBook, founded by Richard Balarkas and Joe Sluys, aims to remove what it calls "the conflicts of interest inherent in the current bookbuilding process".
SquareBook says that it will provide a transparent, fair and automated way to IPO, and one that will "fix the IPO process for the benefit of everyone involved".
So what does it think is broken? The IPO market, Balarkas and Sluys argue, is in long-term decline, despite the attention garnered by a handful of very big deals in the US. Data from Dealogic shows that overall IPO deal numbers and volumes in Europe and the US have roughly halved since the heady days of 2000, and are still well down from 2007 levels too.
At least part of the reason for this, they add, is issuer and investor dissatisfaction with the process as it stands today.
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| Richard Balarkas, SquareBook |
"We think things are coming to a head in the IPO market," says Balarkas. "In the past there has been an acceptance that investment banks had this virtuous circle of analysts, corporate relationships and secondary market distribution, and that if you wanted to get an allocation in an IPO then you had to feed commission dollars to the banks."
