USgears up for flurry of share listings
THEUNITEDStates is gearing up for its biggest week of initial public offerings (IPO) in nearly two years, in a welcome sign that an economic recovery is well under way in the world’s biggest economy.
There are eight IPOs – where companies float new shares on the stock markets – lined up to take place this week. They are expected to raise $3.5bn (£2.15bn), increasing 2009’s total so far by 66.1 per cent.
The IPOs run the gamut of sectors from real estate investment trusts (REIT), created to buy toxic assets, to a clean tech firm that has never made a profit. That broadening of industries shows how much the IPO market has healed since a six-month virtual drought ended in February, experts say. The recovery in IPO markets started in China and Brazil and has now come to the United States.
“It’s too early to say, ‘Everything’s fine. Everyone come back into the pool’, but we are seeing signs that more and more types of investors are coming back to the market and there is robust interest in IPOs,” said Mary Ann Deignan, head of equity capital markets for the Americas at UBS Investment Bank.
The number of deals would make it the busiest since the week of 9 December 2007, when 11 IPOs came to the market. So far this year, there have been only 22 IPOs.
Among the IPOs ready to test investor appetite for risk is Foursquare Capital, a REIT that will be run by a unit of money manager AllianceBernstein and plans to raise $500m with which to buy “toxic assets” under a US Treasury scheme.
Two other REITs, Colony Financial and Apollo Commercial Real Estate Finance, created by Leon Black’s private equity firm, are each seeking hundreds of millions of dollars to buy commercial mortgage-backed securities, betting that their values will rebound.
But a flop or two next week, or a sudden end to the recent stock market rally, could be enough to send investors running for the doors again, one analyst said.
“People could be frightened if some of these deals go badly,” said Nick Einhorn, a research analyst at investment firm Renaissance Capital.