Small-Cap IPOs

Small Fry, Big Cheese

  • Why it matters

    Why it matters

    IPOs of small and mid-sized companies hold a special allure for investors, due to their disproportionately high growth. The number of investors buying small shares has jumped sharply in the last year.

  • Facts

    Facts

    • European IPOs with a volume of €50-100 million ($57-114 million) saw price increases of more than 31 percent in the first half of this year.
    • Major European corporations have experienced below-average growth as the euro has gained value against the US dollar in recent months.
    • According to one survey, the share of fund buyers worldwide planning to invest in small shares has almost doubled over 2016, to 60 percent.
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    Audio

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Businessman Grows Wealth | Yellow Business Concept
Small caps need a lot of love, but it might be worth it in the long run. Source: Getty Images

If you want to make a big splash as a small company, Arno Fuchs is your man. His Munich consulting firm Fox Corporate Finance specializes in small and mid-sized companies. His clients include US billionaire and investing legend Warren Buffett, who has long been on the lookout for pearls in German industry.

Those pearls can be very lucrative. Just look at the results of this year’s initial public offerings, or IPOs, which is the process used when a company goes public. While big names such as Delivery Hero have garnered the headlines in Germany, Mr. Fuchs’s firm calculated that shares of smaller startups did far better on average than the IPOs of market heavyweights in the first half of this year.

“Small companies often offer more growth opportunities than large corporations,” said Stefan Weiner, head of German share issues with US investment bank JP Morgan.

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