You know the times are changing when banking giants like Goldman (NYSE:GS), Citigroup (NYSE:C) and UBS (NYSE:UBS) become leads on a relatively small IPO like PetroAlgae (OTC:PALG), which will raise up to $200 million.
PetroAlgae is a highly speculative company trying to create oil from algae, and which has lost about $58 million over the last three years.
Another bio-fuel developer, Gevo Inc., is also being underwritten by Goldman and UBS, among other, this one for an even smaller $150 million.
With the extremely weak economy, IPOs have been slow this year, and Goldman so far has only underwritten on average $225 million for each one. Close to 10 years ago it was over three times that much per offering.
Citgroup has experienced almost the exact same ratio of decline, dropping to $220 million on average for each IPO in 2010, dropping form $655 million a decade ago.
What is a negative for the giant financial institutions is great news for companies like PetroAlgae, who probably could have never lined up an underwriting team like they have now in better economic times.
When communicated with regulators about planning to launch an IPO in the early part of August, they didn't give any date as to when it will happen. That means it could be years before it is brought to market.
Being already traded over the counter, when they do get listed, it'll be thorough what is called a reverse merger, which is a complicated process which is equivalent to an IPO.