The relative scarcity of investable ideas in public markets could be an opening for investors and new companies, according to Morgan Stanley’s Colin Stewart.
"There's been a shrinking number of public companies in the market. So, if you went back to 2000, there were maybe 7,300-7,500 companies. That number today is below 4,000. It gets particularly acute in technology. In part, it's driven by M&A—large companies that aren't growing as fast, that aren't as disruptive, are looking to find those companies that can help them grow and be disruptive and offer the kind of products and services that their clients want."
"That sort of shortage of companies creates a real opportunity. And so we're trying to point out to investors, to issuers that the time is now. If you wanted to raise capital, you have a market that's willing to pay a high price, a market that's willing to put a large amount of money to work, for the kind of opportunities they can't find in the public markets, namely, growth companies of scale that are really disrupting their end markets."
"So, strong markets, good performance of the IPO product, good valuations, and a lack of investable ideas. That points to a great opportunity for companies to go public, and to go public very successfully with the right kind of investors, at the right valuation that makes sense both for the new investors, but also for their existing investors and employees."