LinkedIn: a sign of things to come?

Associated Press

NEW YORK

Success breeds followers. So will LinkedIn’s blockbuster IPO lure scores of private companies to the stock market?

“One company does not make a trend, but it can certainly help,” says Mark Heesen, president of the National Venture Capital Association, the venture-capital community’s trade group.

LinkedIn Corp. jumped 109 percent on its first day of trading Thursday. Financial-news channels tracked the company’s soaring stock as it lifted off, turning its backers into millionaires and maybe more on paper. A dazzling debut like that, Heesen says, is bound to encourage eager entrepreneurs and the investors who back them to follow LinkedIn’s lead.

The networking website raised $352 million from investors, and then more than doubled from its $45 opening price. The stock slipped 1 percent Friday to $93.09.

LinkedIn is the biggest example of a trend that’s already under way but has escaped much notice until now. The market for initial public offerings finally has emerged from a long drought. Car-sharing service Zipcar Inc., hospital chain HCA Holdings and others have raised $24 billion through initial public offerings so far this year, according to data provider Dealogic. That’s more than triple the amount during the same period a year ago.

Kathleen Smith, a principal at the IPO advisory firm Renaissance Capital, says that if companies keep going public at their current pace, more than 200 companies would raise $50 billion this year. It would easily be the best year for IPOs since the Internet bubble popped. “2011 could be the best year since 2000,” Smith says.

One reason for the rush of companies wanting to go public: They are joining a two-year rally. The typical newly listed company lost half its value in 2008, using Renaissance Capital’s IPO index as a gauge. The index, which tracks returns on companies listed in the previous two years, jumped 20 percent last year and is up 3.4 percent so far this year.