|
New York: Spring may be around the corner but the market for initial public offerings of stock in the US has stayed in hibernation.
Only the huge IPO by Visa, the world's largest credit card network, with a pricing expected later this month, is cheering Wall Street.
With the Standard & Poor's 500 Index down more than 11 per cent year to date, bankers remain reluctant to bring new equity to the market.
No fewer than 30 US IPOs were withdrawn or postponed in January and February, according to data provider Dealogic. Globally, more than 60 IPOs were put on ice in the first two months.
"We are off to our worst start for IPOs in the United States since 2003," said Richard Peterson, director of capital markets at Thomson Financial.
Nine deals
"There have only been nine deals priced so far this year and there hasn't been a deal priced in the past two weeks," added Peterson.
If the stock markets don't reverse course soon, it will remain difficult for new offerings to catch the imagination of the public, experts say.
"Weakness in the overall stock market translates into the IPO market," said Jay Ritter, professor of finance at University of Florida.
"The IPO market tends to be hyper sensitive to movements in the broader market... and this hyper sensitivity tends to make the IPO market somewhat manic depressive," said Ritter.
In January and February, the global credit crisis forced IPO hopefuls globally to shelve offerings totalling $21.4 billion, almost double the value of new equity issuance, Thomson Financial data showed.
Globally, a total of 92 issuers raised just $12.2 billion in IPOs in the first two months, the lowest level since 2003. In January and February, the US contributed only seven per cent to global IPO issuance value, compared with last year's 33 per cent.
"It's not as gloomy as it was in the middle of January," said Ritter. "It's typical that following market downturns that lots of deals get withdrawn and ... the new filing of deals dries up."
One huge ray of hope for the US IPO market came on February 25 when Visa said it may raise up to $18.8 billion in the largest-ever US initial public offering.
"It could be the oasis in the desert," said Peterson, of the Visa offering.
|
