Nasdaq CEO Greifeld Upbeat On Venture Capital-backed IPOs

Robert Greifeld, chief executive of Nasdaq OMX Group Inc. (NDAQ), was upbeat about initial public offerings of companies backed by venture capital and private equity investors.

Speaking Thursday at the Dow Jones Private Equity Analyst Conference in New York, Greifeld said the window for IPOs is open and VC and private equity backed companies will have a better chance to go public in the coming months. He said that in August the exchange had the highest number of IPO applications in two years.

Greifeld said real estate investment trusts and corporate spinoffs were well represented in the two dozen or so Nasdaq IPOs this year and that only about six of the companies had venture or private equity backing. He said the percentage would rise, but didn't offer specifics.

Venture-capital IPOs have had a particularly tough time this year, but the successful IPO of OpenTable Inc. (OPEN) in May has "opened the window for VC-backed IPOs," Greifeld said.

"It's been a long walk in the desert," he said, but he's "cautiously optimistic" the drought is ending.

Greifeld said private equity and venture capital firms should be mindful not to automatically take cash out after listing shares.

"Things like dividend recaps are clearly red flags," he said. "There's clearly a concern that the smart money is getting out."

Greifeld also downplayed the Sarbanes-Oxley Act as a barrier to foreign companies going public on Nasdaq, noting that most other countries have adopted its key provisions, but he said the U.S. remains alone in its stiff accounting standards requiring financial verification by an outside auditor.

The Nasdaq CEO also sought to deflate the notion that only profitable companies go public. The companies that listed after the IPO drought of the early 1970s had solid business plans and weren't necessarily highly profitable, Greifeld said.

He added that companies going public after a downturn have a higher success rate than those doing so in good times.

He is also bullish on China, seeing it as Nasdaq's single biggest opportunity for growth in the next three years. "It's amazing the pipeline of companies they have in technology parks," he said.

-By Russ Garland; [e-mail]