9 IPOs Last Quarter-- the Fewest Since 1977
U.S. companies are going public at the slowest pace in a quarter century.
Just nine companies completed initial public stock offerings in the third quarter, according to data tracker Thomson Financial in New York. Dozens more canceled sales as the plummeting stock market sapped demand.
The number of deals in the quarter was the fewest for any quarter since 1977, said Jay Ritter, a University of Florida professor who tracks IPO history.
The IPO market has collapsed as the long bear market has worn on and investors have lost their appetite for risky new shares. Scandal has tainted the market amid allegations that brokerages in the late 1990s used hot IPO shares to woo additional underwriting business from corporate executives.
In the heyday of technology IPOs, more than 100 companies were going public each quarter. For example, the fourth quarter of 1999 saw 152 companies sell IPOs, raising a total of $24 billion, according to Thomson Financial. Last quarter’s deals raised $5.5 billion.
Companies that went public last quarter generally sold their shares for less than they expected. Finance company CIT Group, for example, sliced its offering by a third before finding willing buyers.
Kirkland’s Inc., a retailer of home decorating items, also raised a third less capital than planned.
LeapFrog Enterprises Inc. was the last company to go public. The maker of educational toys, which is backed by Michael Milken and Larry Ellison, sold shares July 24. The stock was sold at $13, the low end of the company’s expected range of $13 to $16. The shares have risen since the offering, closing at $18.90 on the New York Stock Exchange on Monday.
Kirkland’s stock has risen to $17.10 from the IPO price of $15. But CIT shares have fallen to $17.98 from their IPO price of $23.
The immediate outlook remains bleak for most companies planning IPOs, bankers said. “We do not expect a dramatic turnaround soon,” said Stuart Bernstein, Goldman, Sachs & Co.’s co-head of equity capital markets for the Americas.
Among firms that may try to sell shares is DoveBid Inc., which organizes online auctions. DoveBid may try to go public this week.
Cinema chains Loews Cineplex Entertainment Corp. and Cinemark may try to sell shares in the fourth quarter. Cinemark postponed its offering in July and hasn’t rescheduled a date. Platinum Underwriters Holdings Ltd., the reinsurance unit of St. Paul Cos., may try to resurrect its offering, which was scrapped in July.
