American IPO market cooling
By Clare Baldwin |
May 11, 2010, Tuesday
|
Print Edition
Print Edition
THE United States market for initial public offerings, which had just begun to warm up, could be facing another chill similar to that triggered by the financial crisis.
"We might be moving from people being cautious about IPOs to people not even bothering to look at IPOs because there is so much other stuff to deal with," said Nick Einhorn, an analyst with Connecticut-based Renaissance Capital.
"It's an easy thing to kind of ignore for now while you figure out your approach to the broader market and your broader portfolio."
Three initial public offerings were pulled last Thursday after the Dow Jones industrial average lost nearly 1,000 points in what was its biggest-ever intraday point loss.
The dramatic slide was the first real stress test for the IPO market in about 20 months.
Low volume
"I think it's very possible that we're going to see something similar to 2008 where deal volume for the next three months will be low," University of Florida finance professor Jay Ritter said last Friday. "It's a global phenomenon, not just the US. The decline in worldwide equity markets and the increase in volatility is putting a heavy chill on IPO market."
IPOs around the world are being canceled as fear over Greece's worsening debt crisis and the surprise drop in US markets rattled investors.
Swire Pacific Ltd, which owns a mix of businesses including Cathay Pacific Airways Ltd, canceled the US$2.7 billion Hong Kong IPO of its property unit last Thursday. Americold Realty Trust - a refrigerated warehouse real estate investment trust backed by billionaire investor Ron Burkle that would have been the largest US share float so far this year - also pulled its downsized US$600 million offering, also last Thursday.
Last week Russian fertilizer maker UralChem postponed a US$642 million IPO due to market uncertainty.
"We might be moving from people being cautious about IPOs to people not even bothering to look at IPOs because there is so much other stuff to deal with," said Nick Einhorn, an analyst with Connecticut-based Renaissance Capital.
"It's an easy thing to kind of ignore for now while you figure out your approach to the broader market and your broader portfolio."
Three initial public offerings were pulled last Thursday after the Dow Jones industrial average lost nearly 1,000 points in what was its biggest-ever intraday point loss.
The dramatic slide was the first real stress test for the IPO market in about 20 months.
Low volume
"I think it's very possible that we're going to see something similar to 2008 where deal volume for the next three months will be low," University of Florida finance professor Jay Ritter said last Friday. "It's a global phenomenon, not just the US. The decline in worldwide equity markets and the increase in volatility is putting a heavy chill on IPO market."
IPOs around the world are being canceled as fear over Greece's worsening debt crisis and the surprise drop in US markets rattled investors.
Swire Pacific Ltd, which owns a mix of businesses including Cathay Pacific Airways Ltd, canceled the US$2.7 billion Hong Kong IPO of its property unit last Thursday. Americold Realty Trust - a refrigerated warehouse real estate investment trust backed by billionaire investor Ron Burkle that would have been the largest US share float so far this year - also pulled its downsized US$600 million offering, also last Thursday.
Last week Russian fertilizer maker UralChem postponed a US$642 million IPO due to market uncertainty.
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