The alternative: Going Public and Private Equity

As a result of the monopoly bank system and the current situation on the stock exchanges, Initial Public Offerings (IPOs), that means public selling (Placement) of voting or non-voting shares, are comparatively rare in Germany. Compared to the United States or Japan, where thousands of companies use the stock exchanges to raise equity capital, the number of German companies which are quoted on the nine German stock exchanges is remarkably small. In the US more than 14.000 companies are currently quoted on the stock markets and in North America alone there are almost than 100 stock exchanges.

However, quotation on the stock market as a result of an innitial public offering (IPO) is not the only way of raising equity capital and the procurement of private capital is not limited to joint-stock companies, because any company (no matter of which legal form) can raise equity capital via a private placement – a capital market issue with an non-registered offering on the free capital market in Germany.

The free capital market, the market for non-registered offerings (“private public offerings”), is an extremely competitive and efficient market that offers all enterprises best prospects for a successful placement. According to reports of the Federal Statistical Office in Wiesbaden, alone in the year 2000 more than 150 billion Euros were turned over at the free capital market. About 20 billion Euros of this were invested in private placements (in Germany the term private placement not only refers to the the offering of large tranches to institutional buyers, but also to the non-registered offering of voting and non-voting shares to private investors, who who usually share in with amounts of between 10.000 and 25.000 Euros).