IPO Market Stalls After 2011 Disappointments

Friday, 06 Jan 2012 07:21 AM

By Dan Weil

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About 70 percent of the U.S. companies that went public last year are now trading below their offering prices, according to Kathleen Smith, a principal at Renaissance Capital. And that’s putting a damper on the initial public offering (IPO) market, The New York Times reports.

More than 200 companies have their IPO plans on hold, the biggest amount in about 10 years, according to Renaissance.

Investors are excited about a potential offering from Facebook. The social networking colossus is expected to go public in the second quarter at a value possibly reaching $100 billion.
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But people aren’t so excited about other companies waiting to go public, such as Toys “R” Us, Yelp, and the Carlyle Group.

Facebook “will bring a potentially unprecedented amount of attention to the IPO market,” Peter Falvey, a managing director at Morgan Keegan, tells The Times. But, “its IPO in all likelihood won’t have a tremendous impact on the ability of other companies to execute offerings.”

And in the unlikely event that Facebook tanks, the IPO market could really take a dive, with investors thinking, “What does that mean for the prospects of other companies?” Falvey says.

And what would it take to get the IPO market running strong?

“You might see more IPOs emerge if we get resolution in Europe or stability that makes investors more comfortable with the overall market,” David Erickson, co-head of equity capital markets at Barclays, tells Bloomberg.

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