"Open forum on Germany’s banking system"

Conference organized jointly by: Elena Carletti (Center for Financial Studies) Jörg Decressin (International Monetary Fund) Jan Pieter Krahnen (University of Frankfurt and Center for Financial Studies) Christian Ossig (Center for Financial Studies) Conference Reader Nr. 2006/0

Initial public offerings and venture capital in Germany

We present a survey on the role of initial public offerings (Epos) and venture capital (VC) in Germany after the Second World War. Between 1945 and 1983 IPOs hardly played a role at all and only a minor role thereafter. In addition, companies that chose an IPO were much older and larger than the average companies going public for the first time in the US or the UK. The level of IPO underpricing in Germany, in contrast, has not been fundamentally different from that in other countries. The picture for venture capital financing is not much different from that provided by IPOs in Germany. For a long time venture capital financing was hardly significant, particularly as a source of early stage financing. The unprecedented boom on the Neuer Markt between 1997 and 2000, when many small venture capital financed firms entered the market, provides a striking contrast to the preceding era. However, by US standards, the levels of both IPO and venture capital activities remained rather low even in this boom phase. The extent to which recent developments will have a lasting impact on the financing of German firms, the level of IPO activity, and venture capital financing, remains to be seen. At the time of writing, activity has come to a near stand still and the Neuer Markt has just been dissolved. The low number of IPOs and the fairly low volume of VC financing in Germany before the introduction of the Neuer Markt are a striking and much debated phenomenon. Understanding the reasons for these apparent peculiarities is vital to understanding the German financial system. The potential explanations that have been put forward range from differentces in mentality to legal and institutional impediments and the availability of alternative sources of financing. Moreover the recent literature discusses how interest groups may have benefited and influenced the situation. These groups include politicians, unions/workers, managers/controlling-owners of established firms as well as banks. Revised version forthcoming in "The German Financial System", edited by Jan P. Krahnen and Reinhard H. Schmidt, Oxford University Press

Over-allotment options in IPOs on Germany´s Neuer Markt : an empirical investigation

Over-allotment arrangements are nowadays part of almost any initial public offering. The underwriting banks borrow stocks from the previous shareholders to issue more than the initially announced number of shares. This is combined with the option to cover this short position at the issue price. We present empirical evidence on the value of these arrangements to the underwriters of initial public offerings on the Neuer Markt. The over-allotment arrangement is regarded as a portfolio of a long call option and a short position in a forward contract on the stock, which is different from other approaches presented in the literature. Given the economically substantial values for these option-like claims we try to identify benefits to previous shareholders or new investors when the company is using this instrument in the process of going public. Although we carefully control for potential endogeneity problems, we find virtually no evidence for a reduction in underpricing for firms using over-allotment arrangements. Furthermore, we do not find evidence for more pronounced price stabilization activities or better aftermarket performance for firms granting an over-allotment arrangement to the underwriting banks

Initial Public Offerings and Venture Capital in Germany

We present a survey on the role of initial public offerings (IPOs) and venture capital (VC) in Germany after the Second World War. Between 1945 and 1983 IPOs hardly played a role at all and only a minor role thereafter. In addition, companies that chose an IPO were much older and larger than the average companies going public for the first time in the US or the UK. The level of IPO underpricing in Germany, in contrast, has not been fundamentally different from that in other countries. The picture for venture capital financing is not much different from that provided by IPOs in Germany. For a long time venture capital financing was hardly significant, particularly as a source of early stage financing. The unprecedented boom on the Neuer Markt between 1997 and 2000, when many small venture capital financed firms entered the market, provides a striking contrast to the preceding era. However, by US standards, the levels of both IPO and venture capital activities remained rather low even in this boom phase. The extent to which recent developments will have a lasting impact on the financing of German firms, the level of IPO activity, and venture capital financing, remains to be seen. At the time of writing, activity has come to a near stand still and the Neuer Markt has just been dissolved. The low number of IPOs and the fairly low volume of VC financing in Germany before the introduction of the Neuer Markt are a striking and much debated phenomenon. Understanding the reasons for these apparent peculiarities is vital to understanding the German financial system. The potential explanations that have been put forward range from differences in mentality to legal and institutional impediments and the availability of alternative sources of financing. Moreover the recent literature discusses how interest groups may have benefited and influenced the situation. These groups include politicians, unions/workers, managers/controlling-owners of established firms as well as banks.Initial Public Offering (IPO), Venture Capital, Germany

Underpricing of venture-backed and non venture-backed IPOs : Germany´s Neuer Markt

This paper analyzes a comprehensive data set of 160 non venture-backed, 79 venture-backed and 61 bridge financed companies going public at Germany´s Neuer Markt between March 1997 and March 2002. I examine whether these three types of issues differ with regard to issuer characteristics, balance sheet data or offering characteristics. Moreover, this empirical study contributes to the underpricing literature by focusing on the complementary or rather competing role of venture capitalists and underwriters in certifying the quality of a company when going public. Companies backed by a prestigious venture capitalist and/or underwritten by a top bank are expected to show less underpricing at the initial public offering (IPO) due to a reduced ex-ante uncertainty. This analysis provides evidence to the contrary: VC-backed IPOs appear to be more underpriced than non VC-backed IPOs

φ-Aromaticity in prismatic {Bi6_6}-based clusters

The occurrence of aromaticity in organic molecules is widely accepted, but its occurrence in purely metallic systems is less widespread. Molecules comprising only metal atoms (M) are known to be able to exhibit aromatic behaviour, sustaining ring currents inside an external magnetic field along M–M connection axes (σ-aromaticity) or above and below the plane (π-aromaticity) for cyclic or cage-type compounds. However, all-metal compounds provide an extension of the electrons’ mobility also in other directions. Here, we show that regular {Bi$_6$} prisms exhibit a non-localizable molecular orbital of f-type symmetry and generate a strong ring current that leads to a behaviour referred to as φ-aromaticity. The experimentally observed heterometallic cluster [{CpRu}$_3$Bi$_6$]–, based on a regular prismatic {Bi$_6$} unit, displays aromatic behaviour; according to quantum chemical calculations, the corresponding hypothetical Bi$_6$$^{2−}$ prism shows a similar behaviour. By contrast, [{(cod)Ir}$_3$Bi$_6$] features a distorted Bi$_6$ moiety that inhibits φ-aromaticity

Stabilizing a metalloid Zn12_{12} unit within a polymetallide environment in [K2_{2}Zn20_{20}Bi16_{16}]6−^{6-}

The access to molecules comprising direct Zn–Zn bonds has become very topical in recent years for various reasons. Low-valent organozinc compounds show remarkable reactivities, and larger Zn–Zn-bonded gas-phase species exhibit a very unusual coexistence of insulating and metallic properties. However, as Zn atoms do not show a high tendency to form clusters in condensed phases, synthetic approaches for generating purely inorganic metalloid Zn$_{x}$ units under ambient conditions have been lacking so far. Here we show that the reaction of a highly reductive solid with the nominal composition K$_{5}$Ga$_{2}$Bi$_{4}$ with ZnPh2 at room temperature yields the heterometallic cluster anion [K$_{2}$Zn$_{20}$Bi$_{16}$]$^{6-}$. A 24-atom polymetallide ring embeds a metalloid {Zn$_{12}$} unit. Density functional theory calculations reveal multicenter bonding, an essentially zero-valent situation in the cluster center, and weak aromaticity. The heterometallic character, the notable electron-delocalization, and the uncommon nano-architecture points at a high potential for nano-heterocatalysis

Significant Role of Collagen XVII And Integrin beta 4 in Migration and Invasion of The Less Aggressive Squamous Cell Carcinoma Cells

Collagen XVII and integrin alpha 6 beta 4 have well-established roles as epithelial adhesion molecules. Their binding partner laminin 332 as well as integrin alpha 6 beta 4 are largely recognized to promote invasion and metastasis in various cancers, and collagen XVII is essential for the survival of colon and lung cancer stem cells. We have studied the expression of laminin.2, collagen XVII and integrin beta 4 in tissue microarray samples of squamous cell carcinoma (SCC) and its precursors, actinic keratosis and Bowen's disease. The expression of laminin.2 was highest in SCC samples, whereas the expression of collagen XVII and integrin beta 4 varied greatly in SCC and its precursors. Collagen XVII and integrin beta 4 were also expressed in SCC cell lines. Virus-mediated RNAi knockdown of collagen XVII and integrin beta 4 reduced the migration of less aggressive SCC-25 cells in horizontal scratch wound healing assay. Additionally, in a 3D organotypic myoma invasion assay the loss of collagen XVII or integrin beta 4 suppressed equally the migration and invasion of SCC-25 cells whereas there was no effect on the most aggressive HSC-3 cells. Variable expression patterns and results in migration and invasion assays suggest that collagen XVII and integrin beta 4 contribute to SCC tumorigenesis.Peer reviewe

Peroxidases identified in a subtractive cDNA library approach show tissue-specific transcript abundance and enzyme activity during seed germination of Lepidium sativum

The micropylar endosperm is a major regulator of seed germination in endospermic species, to which the close Brassicaceae relatives Arabidopsis thaliana and Lepidium sativum (cress) belong. Cress seeds are about 20 times larger than the seeds of Arabidopsis. This advantage was used to construct a tissue-specific subtractive cDNA library of transcripts that are up-regulated late in the germination process specifically in the micropylar endosperm of cress seeds. The library showed that a number of transcripts known to be up-regulated late during germination are up-regulated in the micropylar endosperm cap. Detailed germination kinetics of SALK lines carrying insertions in genes present in our library showed that the identified transcripts do indeed play roles during germination. Three peroxidases were present in the library. These peroxidases were identified as orthologues of Arabidopsis AtAPX01, AtPrx16, and AtPrxIIE. The corresponding SALK lines displayed significant germination phenotypes. Their transcripts were quantified in specific cress seed tissues during germination in the presence and absence of ABA and they were found to be regulated in a tissue-specific manner. Peroxidase activity, and particularly its regulation by ABA, also differed between radicles and micropylar endosperm caps. Possible implications of this tissue-specificity are discussed