NEW YORK (Reuters) - Pequot Ventures, the $2 billion venture capital arm of hedge fund Pequot Capital, plans to take two of its portfolio companies to the public market soon, managing director Larry Lenihan said on Tuesday.
One of these companies is a technology start-up and the other makes an alternative energy product, Lenihan said, but he did not disclose their names or how much they plan to raise.
Speaking at the Reuters Hedge Funds and Private Equity Summit in New York, Lenihan said the overall IPO market has become less attractive for venture-backed start-ups because it entails high regulatory costs and lower returns than a sale to a larger company.
"It is miserable to be public," he said, especially for companies with market values of around $100 million. "It is killing small-cap companies," he said.
Uncertain markets have further depressed initial public offerings of venture-backed companies, with only five such companies going public in the first quarter of 2008, compared with 18 in the year-ago quarter, according to data from the National Venture Capital Association.
But the two Pequot-backed companies planning their public debuts have strong fundamentals, Lenihan said.
Pequot Ventures will be spun off into a separate business and change its name to FirstMark Capital in June.
(For a summit blog: summitnotebook.reuters.com/)
(Editing by Brian Moss)
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