MONDAY, JUNE 20, 2011
sÜddeutsche zeitung
5
Money & Business
Young American Firms Go Overseas to Raise Cash By GRAHAM BOWLEY
Reva Medical, a maker of heart stents in San Diego, California, found little investor interest when it tried to go public last year, so it did what a small but increasing number of young American companies are doing — it looked abroad, in this case the Australian stock exchange. “There are so many companies that require capital like our company, and they don’t have access to the capital markets in the United States,” said Robert Stockman, Reva’s chief executive. “People are looking at any option to stay alive, which is what we did.” Reva’s example shows that nearly three years since the financial crisis began, markets in the United States are barely open to many companies, leading them to turn to investors abroad. Nearly one in 10 American companies that went public last year did so outside the United States. Besides Australia, they turned to stock markets in Britain, Taiwan, South Ko-
rea and Canada, according to the consulting firm Grant Thornton and Dealogic. The 10 companies that went public abroad in 2010 — and 75 from 2000 to 2009 — compares with only two United States companies choosing foreign exchanges from 1991 to 1999. The trend reflects a global outlook toward stocks, just as the number of public companies in the United States is shrinking. “Issuers have to put themselves through a grinder to go overseas, so any significant percentage of overseas listings is a sign that our markets have become hostile to innovation and job formation,” said David Weild, a senior adviser to Grant Thornton. A variety of factors explain each decision to list on a foreign exchange, like the increased regulatory costs of going public in the United States. Underwriting, legal and other costs are typically lower in foreign markets, companies say. To maintain a public listing costs only $100,000 to $300,000 a year in Taiwan versus $2 million to $3 mil-
Fleeing to foreign stock markets to find new investors. lion in the United States. There are concerns that some foreign exchanges attract companies because their oversight may be less stringent. Companies insist standards are high. Sanjay Subhedar, managing director of Storm Ventures, a California venture capital firm, said investors and banks in the United States who participate in public offerings are no longer interested in small companies. Institutional investors like mutual funds want the liquidity of larger offerings with abundant buyers and sellers, he said; bank underwriters want to focus on the more lu-
crative fees that bigger deals generate. One of the companies he invests in, Integrated Memory Logic (iML), of Campbell, California, last year became one of the first non-Taiwanese companies to list on the Taiwan Stock Exchange. A supplier of semiconductor chips for LCD screens, it raised $40 million with a 10 percent sale of the company after the exchange changed its rules to allow foreign companies to join. Some American businesses, like HaloSource of Seattle, are discovering that investors in the United States are not as interested as foreign investors in companies whose growth potential is strongest overseas. HaloSource makes water purification devices for use in American pools and spas but also for drinking water in countries like India, China and Brazil. Last year, it had an $80 million initial public offering on the Alternative Investment Market in London. One reason it chose London, according to James Thompson, chief financial officer, was that investors there were more sympa-
thetic to growth opportunities in emerging markets. For some companies like HaloSource, the move to a foreign exchange may make longer-term strategic sense as their growth shifts away from America to markets like China and India. Samsonite, the luggage company that was founded in Denver in 1910 but shifted its corporate location to Luxembourg in 2009, now sees most of its growth coming from Asia. Its initial public offering recently raised $1.25 billion in Hong Kong. The attraction of an Asian listing will be underlined further this month when Prada, the Italian fashion house, also lists its shares in Hong Kong. While some American companies see their foreign I.P.O. as a long-term move, others see it as an interim step, one that after expansion could lead them to seek investor interest back home and a dual listing in the United States. One reason Reva Medical chose Austra-
Turning From Glass To Tourism In Murano
PHOTOGRAPHS BY MICHELE BORZONI FOR THE INTERNATIONAL HERALD TRIBUNE
Hotel developers see Murano, Italy, as a less crowded alternative to Venice. The island exported glassworks from factories like these remaining ones.
erable dent in Murano’s global glass market. “There’s been a massacre of companies,” said Gianluca Vecchi, chairman of Andromeda, a chandelier and lighting fac-
tory that he said is facing a bumpy patch. “Too many things have happened in too short a time,” and now “there are no more tears to cry.” In many ways, the island has mapped its
own decline. Murano’s current situation “is typical of what happened to other industrial districts in Italy in the past 10 years,” said Stefano Micelli, a professor of innovation technology at Ca’Foscari University in Venice and dean of Venice International University. Comfortable after years of prosperity, many Murano companies did not look beyond their furnaces, he said. The island is being forced to imagine a future beyond glass. Proximity to Venice had already fueled a fledgling tourism industry. But Murano is notoriously insular. It has two hotels and a handful of bed and breakfasts that can accommodate a total of 72 guests. There is not much nightlife.
In a Poor Economy, Less Vexing Packages By STEPHANIE CLIFFORD
Those impenetrable plastic clamshell packages may become a welcome casualty of the difficult economy. When petroleum prices rose, first in 2008 and again this year, the cost of producing plastic packages, which are petroleumbased, shot up. “With the instability in petroleum-based materials, people said we need an alternative to the clamshell,” said Jeff Kellogg, vice president for consumer electronics and security packaging at the packaging company MeadWestvaco. Target has removed the plastic lids from yogurts and has eliminated plastic in light bulb packages; Wal-Mart Stores have pushed suppliers to concentrate laundry detergent so it can be sold in smaller containers; and at Home Depot, EcoSmart LED bulbs will be sold in a corrugated box, rather than a plastic case. Shoppers have long complained that
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Sources: Grant Thornton; Dealogic
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THE NEW YORK TIMES
lia was that country’s system of research hospitals. But Mr. Stockman said he would have preferred to list in the United States in the first place — after all the traveling to Australia. “All things being equal, it would have been easier,” he said. “It is a long way.”
By VERNE G. KOPYTOFF
By ELISABETTA POVOLEDO
has been inextricably linked with glassmaking since 1291, when Venice moved its glass furnaces to this site. In the boom years of the 1950s and 1960s, boats weighted down with glass products — miniature animal families, glassware and vases, delicate rococo chandeliers constructed of hundreds of pieces — set sail from here to satisfy insatiable foreign markets. Then, the majority of Murano’s inhabitants, who today number about 4,600, were involved in one aspect of glassmaking or another. Local boys would begin working in the furnaces before they turned 10 and spend a lifetime honing their skills. Things are different today. Official industry figures for annual revenue from artistic glass do not exist but can be estimated to hover around 150 million euros, or $217 million, according to Gianni De Checchi, secretary of the Confartigianato di Venezia, a trade group for artisans. Ten years ago it was 200 million euros, he said, with profit margins worn away by rising production costs as well as labor costs. Lower-quality products from China and Eastern Europe have also made a consid-
25%
Percentage of initial public offerings by U.S. companies that listed only on a foreign market.
Sites Grow For Saving Data Online
MURANO, Italy — The quasi-monastic quiet of this lagoon island a short vaporetto ride from Venice has been broken intermittently in recent months by ear-splitting saws and the low grumble of heavy machinery. A wing of a late 19th century brick factory built by the Società Veneziana Conterie e Cristallerie, once one of the largest bead and glass factories on the island of Murano, is metamorphosing into a 130-room deluxe hotel, which is expected to open in the summer of 2012. At the height of production in the 1920s and early 1930s, the factory employed as many as 1,000 people, with another 4,000 working on contract. But it shut its doors in 1992, a victim of changing tastes and a rapidly globalizing economy. Off a nearby canal, work is under way on another former glass factory destined to join the top-end Kempinski Hotels chain. Another, smaller hotel in an abandoned glassworks is still on the drawing board. The new hotels reflect a radical change in the self-image of an island whose history
Hard times on an island famous for its crafts since 1291.
GOING ABROAD
Wrapping that pleases consumers but still thwarts thieves. clamshells are a literal pain, and environmentalists denounce them as wasteful. “I’ve heard over the years, ‘How come I need a knife to get into my knife?’ ” said Ronald Sasine, the director for packaging procurement at Wal-Mart. Amazon offered “frustration-free packaging” in 2008; other online retailers followed suit. But in physical stores, the packaging has to sell the product, whether with explanatory text, bright colors or catchy graphics. And it has to deter shoplifters. MeadWestvaco addressed the packag-
ing problem by sticking two tamper-evident cardboard sheets together, and adding a clear laminate that prevented tearing. A plastic bubble is formed to a specific product. The company says all Swiss Army knives use the new packaging, and about 85 percent of the computer memory market. MeadWestvaco says the package reduces plastic by 60 percent, on average, versus the clamshell. It also is lighter by 30 percent, which cuts down on transportation costs and fuel use. Other packaging suppliers are offering similar packages. The cost savings are big, said Lorcan Sheehan, the senior vice president for marketing and strategy at ModusLink, which advises companies like Toshiba and HP on their supply chains. The cost of material and labor is 20 to 30 percent cheaper than with clamshells.
“If Murano becomes another base for tourism, as we hope will happen, then the city will live again, it will be revitalized around the clock,” said Francesco Paternostro, managing director of Lagare, the Milan real estate development group behind the hotel in the ex-Conterie. The group chose to invest in Murano, he said, because demand for accommodations remained high in the lagoon and because it was cheaper than developing in Venice. He is certain that Murano’s characteristic charm holds its own allure. “People will start going to Venice for the day,” and not the other way around, he said. The prospect that China and other developing countries will send millions of tourists abroad, flush with new wealth, is also pushing the change. Venice is already so packed, “one can barely walk around the streets anymore,” said Guido Ferro, whose company has been dabbling in the hotel business here after centuries spent in glass furnaces. Regardless of the island’s future development, glass will still be part of it, said Mr. Ferro, who is also president of the island’s only glassmaking school. “People come to Murano,” he said, “because they want to see the furnaces.”
Packaging is becoming cheaper, lighter, more environmentally friendly and easier to open, right. An older hard ‘‘clamshell’’ is at left.
Also, he said, 30 to 40 percent more of the products can fit on a store shelf. And graphics and text can be printed on the packages. Because most people cannot tear out the product with their hands, it helps prevent theft. Also, the small Sensormatic tag that is linked to a store’s alarm system is hidden
between the two sheets of cardboard so a shoplifter cannot easily peel it off. Steven Hoskins, manager of packaging engineering for the Apex Tool Group, said that losing the plastic packaging saved money, allowed for more products per shipment and cut waste. And the package is relatively pain-free.
SAN FRANCISCO — A number of online storage companies are quickly gaining users. People are saving Word documents, spreadsheets and photos in “the cloud,” a Web-based file cabinet accessible from any device with an Internet connection. New investment is driving the business, adding to an already lengthy list of competitors: Dropbox, YouSendIt.com, Cx.com, Box.net, 4Shared, SpiderOak and Apple’s iCloud. Google began acclimating users to the concept with Google Docs in 2006, and online backup or storage services like MobileMe from Apple, Windows Live SkyDrive from Microsoft, Mozy from EMC and SugarSync are now familiar. What’s changed is that more people need them. Nearly 60 percent of adults in America with online access own at least two Web-connected devices, according to Forrester Research. And 4.5 million people have at least nine gadgets. “Our vision is to simplify millions of peoples’ lives,” said Drew Houston, chief executive of Dropbox, where 25 million users upload 300 million files a day. “You don’t have to worry that you have some files on your Mac, some stuff on your work computer and then some more on your iPhone.” Dropbox stores 100 billion files on its servers. Box.net says it has six million users; Mozy, three million. And servers and data storage devices get cheaper each year. Online storage lets users make changes to a Word file, for example, so that there is a single version available from both their work and home computers. It is a process known as synchroni-
Storage for nine different gadgets in just one place. zation. Users can collaborate on documents with colleagues or share video clips and photos. Many online storage services let users store a minimal amount of data free of charge. Saved files are accessible from any Internet-connected device. Backing up files is a side benefit. But security is still an issue for most consumers. While there are no known cases of purloined documents, hackings and thefts at big companies like Sony, RSA Security and Epsilon Data Management, the e-mail marketing firm, worry the late adopters. A security expert complained recently about how Dropbox encrypted files on its service. Dropbox’s employees could get access to unencrypted files, he said. Mr. Houston said that Dropbox takes security very seriously. Dropbox likens its protections to what banks and the military use. Files saved with Dropbox are encrypted during transmission to Amazon.com’s servers, which the company leases. After arriving, the files are divided into discrete blocks, which are then individually encrypted. So far, no one company has a clear advantage in the market, which spans both consumers and business customers. Two months ago, Amazon introduced Cloud Drive for storing all kinds of files, including digital music. Cx.com, another service, premiered in January with financing from TomorrowVentures, a venture capital company controlled by Eric E. Schmidt, Google’s chairman. Brad Robertson, chief executive of Cx.com in Palo Alto, California, said he was not intimidated by the competition. With new products, he said, “you have a while before each one finds its uniqueness.” He conceded that eventually, “some get gobbled up and go away.”