Google IPO Auction.

[KnowItAll]

Rumors going around, fueled by this article in the FT.

Google considers online auction of IPO shares

In a single swoop, Google could potentially knock out the investment bankers and institutional share holders.

Any comments from our esteemed bankers?

[kevin]

From the article the bankers are pretty pissed off as they are missing out on the action. Quote " an online auction would risk setting an unrealistically high price for Google's shares"

Which of course is totally different from what happened during the dot.com bubble

They also complain about all the shares ending up in a few hands and there being no real public market. Again, same thing happens during a "normal" IPO. There is no public market until after the banks and underwriting institutions and various privileged investment houses have made their profit and pushed the price higher. By the time the average investor even has a chance to get hold of shares at these inflated prices, even if he has applied for shares in the IPO, the party is over and he will probably make a loss.

However their editorial does make some very good points in relation to how this may ultimately hurt Google. That there is a need for experienced investment bankers to help float the company and gain access to foreign and institutional investment money, the real life blood of any public company.

What are needed are HONEST bankers and a better system of regulation and accountability for the IPO. Too many people were burnt the last time. Also there needs to be a way for the little man to be able to get involved, maybe a mixture of traditional IPO and Google’s auction plan.