If you sensed as an investor that the initial public offering calendar was off to a really slow start in 2009, you were correct. IPOS are off to their slowest start in 2009 in at least a decade, as the recession, investor skittishness and a challenging outlook for the stock market have decreased institutional investor demand for new stock offerings.
No company raised funds via an IPO in January in New York or London, and the stock market's 8% S&P 500 slide for the month didn't help the climate for new offerings, so says Stock Analyst C. Leonard Bauer.
"Most institutional investors remain in defensive mode, which really lowers demand for new stock. Given current economic fundamentals and overall valuations, institutions are more likely to buy shares in an undervalued company than in an IPO," Bauer said.
"The risk-tolerance level is just not there for new offerings right now," Bauer said. "It's forcing companies to seek out new sources of capital, where possible." Bauer added that he does not own shares in any stock or IPO.
No company has raised money in an IPO in New York or London since Grand Canyon Education (NYSE: LOPE) raised $145 million in November 2008.
Sector Analysis: Institutional investor reluctance regarding IPOs is understandable. Many have been stung by stock market declines, redemptions and forced sales to raise cash. Further, barring a turnaround in U.S. GDP and employment trends, look for the IPO calendar to remain light through at least Q2.
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Reader Comments (Page 1 of 1)
2-02-2009 @ 12:23PM
BHarrison said...
With all of the disclosures about the BLATANT and RAMPANT FRAUDS related to IPOs since the early 1990s, the "average investors" do not have the 'fatih and confidence" in IPOs.
This, coupled with the MASSIVE FRAUDS in the FIs and the markets/funds, means that it would be extremely difficult for any rationale and prudent person to invest in IPOs. The ONLY solution is for the goverment to implement prudent and reasonable regulations and effective oversight to INSTILL INTEGRITY in the markets.
If this isn't done, then there will be no fiath and confidence in investing in IPOs.