Hot IPO market catches a chill


Due to a volatile economic situation, the market for Initial Public Offerings has cooled considerably in recent days. Six out of 12 companies scheduled for IPOs this month had postponed them as of Wednesday morning, according to PricewaterhouseCoopers.

The about-face surfaced after investor confidence plummeted due to stock market fluctuations and controversy over the national debt.

After a quiet stretch for public offerings during the recession and ensuing months of slow economic growth, the U.S. IPO market strengthened during the first half of 2011, when 79 companies completed IPOs generating a total of $24.3 billion, PricewaterhouseCoopers reported. That was more than double the amount raised a year ago, when 70 IPOs generated $9.4 billion in the first half of 2010, and many observers suggested IPO activity could return to pre-recession levels this year.

But now all bets are off. Disruptions in the overall market and a variety of recent macroeconomic events may present considerable challenges for companies looking to execute an IPO in the coming months,” said Henri Leveque, leader of PricewaterhouseCooper capital markets and accounting advisory practice, in a news release.

“The summer months, particularly August, are typically a slower time for IPO activity, so it will remain to be seen how quickly market stability and confidence returns and whether those companies waiting in the wings will move forward with their IPO plans come September,” Leveque said.

One indicator of investors appetite for IPOs is the S&P 500 Volatility Index, which surpassed 47 Tuesday, after declining during the past year to about 15, PricewaterhouseCoopers said. During October 2008, when IPO activity plummeted, the score was 89.