Wall Street's latest pitch is a contradiction: Private IPOs

Private-equity firms are desperate to cash out of investments. But enthusiasm for initial public offerings is low after several stockmarket debuts flopped.

- Laura Cooper

Enter so-called private IPOS.

The concept is being bandied about on Wall Street as investors and bankers search for ways to keep the money flowing. The contradictory moniker refers to stock sales in which early backers privately sell to longer-term investors such as mutual funds or sovereign-wealth funds, sidestepping the traditional IPO process.

Private IPOs don't come with the splashy bell-ringing ceremony of a traditional debut or result in publicly traded stock. They do allow companies to avoid the potential embarrassment of a new listing falling flat.

Some on Wall Street balk at the name, seeing it as window dressing for private placements, which are sales of shares from one private owner to another and have been used for years. Skeptics say bankers, never a group to sit still, are playing with semantics to drum up business.