NEW YORK STOCK EXCHANGE GROUP: John Tuttle is witnessing first-hand the overall shift in companies making their way to the public markets. Tuttle is the vice chairman and chief commercial officer of the New York Stock Exchange Group, where he works on overall outreach and business development. The Milford native said he had some hometown pride watching Detroit-based Rocket Companies Inc. go public on the NYSE this past summer and expects to see more Michigan companies take a similar path in the coming months and years.
How would you characterize the overall year for the New York Stock Exchange, and more specifically, the year for Michigan companies that have found their stock market home there?
I would say by all meaningful metrics, 2020 ... was a record year for IPOs, and for the public markets. And you certainly identified one of the largest and highest profile IPOs, coming from downtown Detroit, which was Rocket Mortgage. And (Pontiac-based United Wholesale Mortgage) has also announced its intention to list on the New York Stock Exchange.
It's exciting because there's a lot of ... companies from the metro Detroit area that certainly contributed to the strong year in IPOs, but they're going to continue to contribute even more going into 2021.
What does this say to you about the region?
It's an interesting opportunity for metro Detroit to be prominently showcased in the public markets, meaning this is an opportunity to highlight the diverse range of entrepreneurs and companies coming from the Detroit area. We have the mortgage companies, obviously, but also, you're going to see more emerging technologies, like those around like electric vehicles ... come to the public markets and continue to highlight Detroit as a home for innovation.
Mortgage companies like Rocket and UWM are having record years and opted, for various reasons, to go public in 2020. What does that say to you about the appeal of the public markets?
First of all, there's a couple of trends that are taking place that are favorable to a lot of these companies. One is the demand for housing. Low interest rates as well creates a compelling value proposition for customers and those companies.
But also the trends that are taking place in (electric) vehicles. Obviously, Detroit has always been a mobility hub. But a lot of these startups and companies that have been focused on different parts of the EV ecosystem, given the increased attention by investors and consumers to the space, seem to be well positioned going forward.
What have been some of the key drivers you've been following for why companies are going public?
There's lots of reasons why companies go public. Obviously it's an opportunity to access capital that they can use to grow and expand their business. It's liquidity, which is important for investors and employees. But it's also — and this is what I think is interesting — it's a share currency that these companies can use to conduct acquisitions.
So these companies now can continue to grow and expand, and also to highlight their brands and businesses in a much more public way. And if you think about the EV companies and others, these are companies that do not have long operating histories. Some of them are just at ... the early stages of the revenue curve. And having this visibility and access to capital, particularly with so much demand, from consumers for electric vehicles, they've positioned themselves well in the marketplace.
SPACs, or "blank check companies," have become all the rage this year on Wall Street. It's the route that UWM has chosen to take to the public markets. At the start of the year the vast majority of the general public likely did not know what a SPAC is (it's a shell company that goes public and then merges or acquires with a private company to take it public). What's driven this in your mind?
So it's clear that companies are looking for various avenues to come to the public markets. The well-worn path of an IPO works for many companies. However, there are companies with different profiles and different objectives that are looking for different pathways.
So that's one of the reasons why we created the direct listing, which was used with Spotify, Slack, Palantir, Asana. Companies wanted the benefits of being a public company, but they didn't necessarily need to raise capital at the time of their listing. So we worked on that. We've also advanced the idea of creating a direct listing with a capital raise. So taking the best of the IPO — the ability to raise capital, the best of the direct listing, which is efficiency of pricing and liquidity — and brought them together. So we're on the 2-yard line with the Securities and Exchange Commission to get that completed.
And then this year we really saw SPACs become a meaningful part of the market. Roughly 50 percent of the IPO proceeds in 2020 came from SPACs.
Why all the demand?
A SPAC allows the company to identify a specific business partner, potentially bring on other investors as well through PIPEs — so private investment in a public equity — and it's less like an IPO and more like an M&A transaction, or a last round financing transaction. And with it comes liquidity ... and the benefits of the public market. Potentially, more certainty of getting a transaction completed on a specific timeline, given that the ... IPO window can open and close based on broader macroeconomic conditions.
So for companies that a). just want more certainty of execution with a specific partner, this is an option for them. Or b). for companies that are from a sector that traditionally had not tapped the public markets — think again, electric vehicles where there is perhaps no history of meaningful revenue. However, they're able in a SPAC in their disclosure statements to provide forward-looking projections, which is different from what you're allowed to do in your IPO filings. So, it's a pathway preferred for some companies of this profile.
So it sounds like you're saying there's going to a be a solid shift in the makeup of companies that now go public?
Absolutely. There's been more innovation in the past two years than the preceding two decades when it comes to the capital markets. And so now companies have more options, and we're continuing to develop more options. You know, we're continuing to talk to companies and investors and other stakeholders to think of other pathways as well. I mean, more pathways to the public markets, and (they) can take a path that's more tailored to meet their objectives.
While fairly turbulent at times, it was an all-around record year for investors and stocks. At the same time, the broader economy had a mostly dismal year. How do you as an executive with the New York Stock Exchange view that disconnect?
2020 has been a challenging year for a lot of people and a lot of businesses. The indexes in the stock market are a reflection of investors' views on those companies that are listed on the market, not necessarily the entire economy. That said, a robust stock market can help increase consumer confidence, which can help lead to a more inclusive and broader economic growth.
You also saw the differences for companies that are public versus companies that are not public, in that companies that are public have the ability to access capital at market rates. So if you're a public company, you can access equity, you can access debt ... again at market rates. Smaller companies or private companies, they may not have that opportunity. And so making sure that Main Street has access to financing options and the ability to shore up their balance sheets and the finances to weather the storm is incredibly important for everybody.
"in" - Google News
January 10, 2021 at 12:03PM
https://ift.tt/39mraL0
NYSE exec John Tuttle sees more Michigan companies going public in 2021 - Crain's Detroit Business
"in" - Google News
https://ift.tt/2MLa3Y1
https://ift.tt/2YrnuUx
Bagikan Berita Ini
0 Response to "NYSE exec John Tuttle sees more Michigan companies going public in 2021 - Crain's Detroit Business"
Post a Comment