Many digital unicorns, or privately held businesses valued at more than $1 billion, are choosing to postpone their initial public offerings (IPOs) to remain private for long.
A portion of this can be attributed to easier access to private finance. There is, however, an additional, somewhat less evident reason: raising private capital (and becoming unicorns before going public) enables digital start-ups to participate in significant late-stage private funding rounds, which raises valuations. When they list on stock markets, African tech founders are banking that this would lead to greater stock prices.
African tech founders hoping to achieve higher stock prices when they go public can benefit from the critical advice provided by Isaac Oyegbade, an economic consultant with extensive experience serving clients across financial markets in Africa, the UK, and the US.
He points out that waiting longer is not always a good idea and that there are alternatives. With an emphasis on plans for Initial Public Offerings (IPOs), debt issuance, corporate & growth strategy, and turnaround & transformation agreements, Oyegbade offers professional economic and financial advice to companies of all sizes. He draws attention to crucial factors that digital entrepreneurs should think about when determining whether to go public with their start-ups, such as the possibility of heightened scrutiny and investor fatigue that are common among late-stage private tech companies, BrandSpur business, and economy news reports.
Also read: https://brandspurng.com/2024/09/22/publicis-groupe-finalizes-deal-to-acquire-mars-united-commerce/
Over $1 billion was the valuation of 145 private enterprises in 2016. By 2024, the figure had increased by over 750%, reaching a level just above 1,200. As a result of their expansion, unicorns will face more scrutiny from investors and regulators when they go public.
Uber is a great example of a case study; it raised $15 billion in private capital markets to reach a valuation of nearly $120 billion, made headlines with the largest dollar loss on opening day in American history, and lost nearly 20% of its IPO price in the first two months of trading, mostly as a result of investor mistrust of its business plan.
Through the merger of pre-existing “shell” public corporations—businesses established with the express intent of generating capital through an initial public offering (IPO) to finance the acquisition of private companies—Special Purpose Acquisition corporations (SPACs) effectively enable private companies to become listed on stock exchanges.
Even if their poor post-merger performance has made them less popular in recent years, they are still a popular vehicle and provide African tech founders seeking to achieve high market valuations with a viable option to risk stock price crashes upon ultimate listing.
