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US companies make risky IPOs

MEAD Johnson Nutrition Co, the largest maker of infant formula, is among five companies seeking to raise as much as US$1.13 billion by selling shares this week in the first United States initial public offering in 2009.

A unit of New York-based Bristol-Myers Squibb Co, Mead Johnson expects to raise as much as US$690 million in the biggest planned offering this week. Madison Square Capital, a real estate investment trust specializing in mortgage securities, is attempting to pull in as much as US$230 million.

This year's initial public offerings are off to the slowest start in at least a decade as investors shun all but the safest securities amid the global recession. No company raised money in New York or London in January, data compiled by Bloomberg News show.

"If raising capital is absolutely critical, those doing it now must be willing to take the risk," said Jackie Kelley, Americas IPO leader at Ernst & Young LLP. "If they do get a good valuation, one that they're looking for, it could spur some additional activity."

The US market for initial offerings slowed to a near-halt in mid-2008. In the first half, 32 companies raised US$28.6 billion - and most of that was the US$19.7 billion IPO of Visa Inc, the payment network. In the second half, five companies raised just US$1 billion.


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