Thursday, September 23, 2010

PEU Independent Public Offerings

The IPO market has a large backlog according to Bloomberg:

IPOs on the New York Stock Exchange and the Nasdaq Stock Market have raised $19.1 billion in 2010, while companies from Nielsen Holdings BV and Demand Media Inc. to General Motors Co. filed with the Securities and Exchange Commission to sell $48.9 billion in shares, according to data compiled by Bloomberg. That’s the widest gap since at least 1999, the data show.

What's come to market hasn't generated a big windfall for investors.

More than half the companies that submitted plans for IPOs in 2010 have yet to complete them after 61 percent of this year’s offerings left buyers with losses.

Also, they haven't been as lucrative as hoped.

While 68 percent of the deals raised less than sought, private equity funds and venture capital firms are still seeking to sell holdings after the financial crisis blocked them from exiting investments.

Private equity underwriter (PEU) IPO's haven't been as popular as hoped.

The number of IPOs that have yet to be completed has grown 81 percent from a year ago as investors shunned offerings backed by private equity firms, which take controlling stakes in companies and use borrowed money to finance most of the acquisition.

The 19 initial sales from U.S. companies led by LBO firms have lost 1.9 percent of their value in the first month of trading in 2010, after averaging gains every year since at least 2001, data compiled by Bloomberg and Renaissance show.

“There’s a lot of private equity funds trying to sell companies to show people that the LBO model isn’t broken,” said Charles Bobrinskoy, vice chairman at Chicago-based Ariel Investments LLC, which oversees about $5 billion.

The Carlyle Group's great cash in continued with CoreSite Realty. CoreSite went public in the middle of the range and was higher in early trading. Yet, their $2 billion Nielsen IPO awaits with no date.