IPOs off to slow start for year as Facebook readies offering
In a year heralding the landmark initial public offering of Facebook Inc., share sales got off to a slow start.
Although more companies tapped equity markets in March, IPOs globally raised $16.2 billion in the first quarter, the least since 2009, data compiled by Bloomberg show. That kept the backlog of deals in the U.S. near the highest in more than a decade, according to Renaissance Capital LLC.
Investors are still smarting after losing money last year on IPOs from Groupon Inc. to Glencore International Plc, even as U.S. stock-market volatility fell to an almost five-year low in the quarter and set the stage for a rebound. Share sales in the U.S., Asia and Europe have picked up in recent weeks.
“People are still waiting to see that the IPOs that are coming out now are going to work,” said Joe Reece, global head of equity capital markets at Credit Suisse Group AG. “The market has definitely been improving, especially during March, but people still have a healthy degree of skepticism about the IPO market overall.”
The most recent companies to hold share sales have been rewarded by investors, with about two-thirds trading above their offer price, the data show. That contrasts with Glencore, which held its IPO last May and has lost 27 percent of its value since then. Online-coupon provider Groupon has dropped 12 percent since going public in November.
More companies might take a cue from Facebook, which is planning a $5 billion IPO in early May, according to people with knowledge of the matter. A share sale by the Menlo Park, Calif.-based company would be the biggest offering for an Internet company in history.
“It’s going to push interest in the broader IPO market,” said Francis Gaskins, president of Ipodesktop.com in Marina Del Rey, Calif. “Companies will want to IPO at that time if they can, while people are paying attention to the IPO market.”