Renaissance Capital was founded with the simple goal of providing Wall Street quality products and services covering the IPO market, an area that Wall Street firms are restricted from serving. Historically, IPOs have represented 30% of all equity capital raised.
When we (William Smith, Kathleen Shelton Smith, and Linda Killian) met in the late 1970s at Wharton Business School while getting our MBAs, we didn’t imagine that, one day, we would be working together. After Wharton, we all went to work on Wall Street doing investment research, portfolio management, investment banking, and helping young companies raise money by doing initial public offerings.
We realized that no one was providing independent research on IPOs. The reason? Wall Street firms involved in an initial public offering are restricted from issuing research reports for a period of time before and after the offering. And, anyway, Wall Street research is invariably biased. We knew that the IPO market was a clubby place ripe for some fresh faces. And so, in 1991, we founded Renaissance Capital. We chose the name Renaissance because it represents a period of intellectual, artistic and technologic revival.
Our extensive professional experience in finance and technology meshed very well with the IPO market. Kathy, while Director of Technology and Emerging Growth Investment Banking at Merrill Lynch, took EMC and Cabletron Systems public. Bill, who holds a BS in Electrical Engineering, completed many complex financial restructuring transactions while at Bear Stearns and Kidder Peabody. Linda had managed a mid-cap fund at Citibank.
We treaded new territory and began researching the IPO market. On February 20, 1992 we published our first IPO research report, it was on Scholastic Corporation. We faxed the report to a list of financial institutions in the hopes of obtaining clients. About an hour after we faxed the Scholastic report, Fidelity called and said, “Sign us up”! And so it went. Renaissance IPO Research was launched and our client list began to grow.
In the mid-1990s, the worldwide web was evolving, and the Internet increasingly became an efficient way to reach investors who were waking up to the potential of IPOs. In 1996, our web site was launched and quickly became the leading source of IPO information. Renaissancecapital.com
has been named "Forbes Best of the Web".
In 1997, in response to demand from individual investors, we treaded new territory again and launched the first ever IPO mutual fund, the IPO Plus Fund, (IPOSX). It was a natural extension of our IPO research. We were already analyzing every IPO. As Barron’s referred to the IPO Plus Fund at its inception - this was the first mutual fund that offered retail investors access to IPOs. Now the individual investor with only a $5,000 initial investment could get into IPOs.
With individual investors clamoring to understand IPOs, several book publishers asked us to share our secrets. In February 2001, we published IPOs for Everyone, The Twelve Secrets of Investing in IPOs with John Wiley & Sons. The book shares our years of experience in the IPO market and gives individual investors guidance and understanding on how to profit from the IPO market.
After the IPO market crashed in 2001, Wall Street was found guilty of issuing favorable research on their IPOs in return for being awarded investment banking business. Renaissance Capital's research was selected by many of the Wall Street firms to provide the independent research on their newly public companies required to balance their research opinions. Clients of a major brokerage firms such as Citi, Credit Suisse, Goldman Sachs, JP Morgan and Morgan Stanley now have access to our work.
Tracking performance of the IPO market relative to major indices has always been a challenge. Most look at a simple average of performance of IPOs issued over a given period ignoring float-weighting and timing of inclusion. In 2007, after several years of data analysis, we introduced the Renaissance IPO Index, a float-weighted benchmark of IPO performance. Now, investors can judge the performance of unseasoned IPOs relative to seasoned equities. In 2009, the FTSE Renaissance IPO Index was selected as a finalist for the William F. Sharpe "Most Innovative Index" award.
Renaissance Capital is the leader in IPO research and investment management. Our institutional client base represents the "Who's Who" of the major institutional IPO investors. Our analysts all have top academic credentials and are specially trained in Renaissance’s proprietary research methodology. We analyze and develop an opinion on every single IPO – the good as well as the not so good. Our research ideas and proprietary data are the basis for our asset management and index expertise.
Today, when you think about IPOs, you think Renaissance Capital.