From the U.S. to Hong Kong, initial public offerings skidded through a rough patch in the latter half of the quarter, with companies cutting prices to get their stock market or postponing their plans outright.
As investors wrestled with economic uncertainty and concerns about the debt crisis in Greece, broader stock-market indexes trended downward for more than a month, until the losing streak was broken last week.
"We don't believe any market is exempt from the geopolitical and financial upheaval we've seen recently," says Dan Cummings, head of global equity capital markets at Bank of America.
Still, he and other bankers are cautiously optimistic about the remainder of the year, as long as the broader markets avoid a prolonged slump.
"From a global point of view, it's been a fairly robust first six months of the year. If the markets hold together, we should see a similar pace of issuance for the second half of the year," says John Daly, a managing director in Goldman Sachs Group Inc.'s equity capital markets.
World-wide, 381 initial public offerings were priced in the second quarter, raising $62 billion, according to data tracker Dealogic. That's up from the 334 deals in the same period of 2010, when $43.2 billion was raised.
"We've had larger transactions, which has increased the dollar volume, even though the number of deals hasn't increased as much," said Bill Contente, co-head of equity capital markets for the Americas at J.P. Morgan Chase.
Around the globe, certain areas fared better than others. Although China continued to be a major factor in IPO issuance, accounting for about 25% of all deals priced and dollars raised world-wide, it had its second consecutive year-over-year decline in the second quarter. Its 101 deals raised $14.8 billion in the three months that ended June 30, down from 111 offerings that raised $16.7 billion in the same period of 2010, by Dealogic's count. (Dealogic includes Chinese A-share deals that are largely limited to domestic investors.)
This year, more than 50 companies across the Asian-Pacific region have scrapped IPOs, the third-highest number for the region in a six-month period since 2000, Dealogic said. Among them was Chinese car-parts maker Nanning Baling Technology Co., which in June became the first company to cancel an IPO on a mainland Chinese exchange after its formal launch.
On Sunday, Prada SpA said it exercised the overallotment option for its IPO to sell 63.5 million additional shares, raising an additional 2.5 billion Hong Kong dollars (US$320 million). That brought the total size of the Italian luxury-goods firm's IPO to US$2.47 billion.
The IPO shares, which began trading in Hong Kong on June 24, closed Monday at HK$44.95, up 14% from the HK$39.50 offer price.
U.S. companies produced 31 IPOs, raising $9 billion, up from the 30 that raised $4.6 billion a year earlier. Though there were some standout offerings, most notably from professional networking website LinkedIn Corp., which doubled on its first day of trading in May, pricing and performance came under pressure as the broader markets drifted lower in the second half of the quarter.
Growth was seen in Europe, where 73 new stocks raised $24.6 billion, up from the 60 that raised $10.3 billion. A major factor pumping up Europe's dollar volume was the launch of Glencore International PLC, a mining company with headquarters in Switzerland, which raised $10 billion in May.
The U.K., in particular, showed a pickup, with 14 companies selling $2.5 billion during their debuts, compared with just five that raised $685 million a year earlier.
Other countries that boosted their IPO numbers were Canada and Australia, according to Dealogic. In Canada, 56 new stocks raised $1.6 billion, up from 45 that raised $618 million. Australia saw 22 IPOs raise $334 million, versus 12 that raised $236 million.
Although the performance of IPOs tended to be anemic, volume trends showed continued strength, said IPO research firm Renaissance Capital, based in Greenwich, Conn. "We expect substantial improvements in both issuance and performance during the second half of the year," it said in a research note released Friday. For the latest updates PRESS CTR + D or visit Stock Market news Today
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