In mid-December, a Ridgefield company quietly filed for a $200 million initial public offering of stock, looking to build on an already big energy business.
If U.S. Rep. Jim Himes gets his way, smaller companies will have more success establishing wellheads of capital via the IPO markets.
The Greenwich Congressman is co-sponsor of a federal bill that would make it easier for growth-mode companies to go public, which supporters say would spur job creation by boosting access to capital.
The move comes a decade after Congress passed the Sarbanes-Oxley Act of 2002, a bill meant to amplify the transparency of public companies. Businesses have been critical of the bill since, saying its compliance costs deter companies from holding an initial public offering of stock.
U.S. Sen. Chuck Schumer of New York introduced companion legislation in the Senate with Sen. Pat Toomey of Pennsylvania.
The Reopening American Capital Markets to Emerging Growth Companies Act of 2011 would reduce IPO hurdles by phasing in many of the costliest obligations over time while maintaining key investor protections.
The bill would establish a new category of issuers called “emerging growth companies” that have less than $1 billion in annual revenues at the time they register with the U.S. Securities and Exchange Commission, and less than $700 million in publicly traded shares after the IPO.
The legislation creates what Himes terms a transitional, regulatory period for those companies to make it easier for them to go public. During that “on-ramp” status period, companies would see full compliance with certain obligations phased in over time.
“Companies everywhere are creating new products and ideas that could change the world, but we might not see the next Zipcar or Google if we don”™t make it easier for growing companies to make the jump from upstart to established,” Himes said, in a prepared statement. “This legislation allows fast-growing companies to launch an IPO when they are ready and then scale up to the new regulatory responsibilities associated with going public.”
In a recent survey conducted by Nasdaq and the National Venture Capital Association cited by Himes, 86 percent of CEOs cited accounting and compliance costs as their biggest concern for going public. Himes added that with companies taking longer than ever to go public ”“ more than nine years on average, compared to under five years in the late 1980s ”“ rapid expansion and resulting job growth are delayed.
Still, it is not as though Connecticut companies find themselves barred from the markets. Only in late November, New Haven-based Rib-X Pharmaceuticals Inc. filed for an IPO, looking to raise $80 million as it develops antibiotic drugs to fight infections.
And this month, Ridgefield-based Northern Tier Energy Inc. disclosed plans to raise $200 million, as it operates a refinery and pipeline in Minnesota as well as a chain of convenience stores and supporting bakery, which together produced $3.2 billion in revenue in the first nine months of this year.
