Bankers Burning the Midnight Oil
The clock is ticking as 2007 draws to a close. The IPO market has been reasonable robust, but last week’s selloff might evenutally nip it in the bud.
Looking at the aggregate numbers from the third quarter of 2007, you would think so. Forty companies completed IPOs and raised $11.3 billion, up 79% from a year earlier. The average deal size — admittedly skewed by some large deals — was $282 million, the largest since 2002. In addition, Renaissance Capital’s IPO Index, a weighted index of IPO performance, has returned 17.6% this year.
But the turmoil in the credit markets has not left new equity issues untouched. Thirty-four companies have actually withdrawn their IPO filings this year. Just this week Zars Pharma Inc., a maker of topical pain management drugs, pulled its registration, citing “market conditions.” NovaCardia, maker of a congestive heart failure drug, did the same a month earlier (before being bought by Merck & Co.)......
The next two weeks will be interesting to watch. About 18 companies are slated to price before the end of October, Smith says. There appear to be some compelling narratives among them, including a Chinese developer of multiplayer online games. But there are also a couple of companies tied to the residential mortgage industry that could be in for some pain. Stay tuned. CFO Blog
We are hearing from the bankers that their bonuses have been decimated by the writeoffs the banks have taken in the widely publicized structured finance market, etc. But with the writeoffs in the books, they is a chance they can pull a rabbit out of the hat by rushing deals to market before mid-December. If they can pull it off they can still get paid, given that the are working with a clean slate in the fourth quarter.
Hope springs eternal, and the midnight oil will get burned between now and Thanksgiving.
Reading IPO Tea Leaves
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