current status of the German venture capital market and compares it with the US, UK and France.
In Section 4 we discuss why there are so few IPOs and so little VC financing activity in
Germany. Section 5 concludes.
2. Initial Public Offerings
Development of Initial Public Offerings and Firm Characteristics
For many observers the story of German IPOs (after World War II) starts in 1983 (see, for
example, Schürmann and Korfgen, 1997, p. 23). Taking the IPOs listed in the DAI-Factbook, the
average number of IPOs between 1949 and 1982, was only 3.3 per year. Even though this list
only includes, for the years between 1949 and 1976, IPOs of firms that were still listed in 1994, it
nevertheless shows that IPOs were rare events. (The yearly average for the years 1977 to 1982 is
4.) Only the 1960s were associated with marked numbers of IPOs, most of them occurring in the
context of the (partial) privatization of state-owned firms such as Veba, Preussag, VEW,
Lufthansa, and Volkswagen. The low number of IPOs can be seen as evidence for the secondary
role that the stock market played in Germany. Indeed, after the Second World War the number of
listed German stock corporations decreased from 686 in 1956 to a minimum of 442 in 1983.2
In 1983, the number of IPOs started to increase, reaching an annual average of 19.5
between 1984 and 1996. (See table 1.) However, compared to the US and the UK, IPO activity
still remained rather low. For example, in the years between 1988 and 1995 a total of 151 IPOs
were carried out in Germany, compared to more than 1000 in the UK and nearly 2500 new
listings on the NYSE and the American Stock Exchanges and 3000 at Nasdaq (Schuster, 1996,
p. 5).
Starting in 1997, however, Germany witnessed an unprecedented increase in IPO activities.
In the year 1999 alone, more IPOs were carried out than in the 10 years from 1988 to 1997. Of
course, the world-wide stock market downturn after 2000 also resulted in a rather sudden end of
the IPO boom in Germany. Whether IPO activity will resume again when stock market
conditions improve, or whether we have indeed observed a temporary and one-time IPO wave in
Germany, remains to be seen.
2 Information about stock listings and IPO activities are taken from the DAI-Factbook 2003.