April 24 (Bloomberg) -- Companies are beginning to go public again after a monthlong lull, attributable to falling share prices and tightening credit. Their performance shows the market for initial public offerings is anything but robust.

RWE AG sold fewer shares of its American Water Works Inc. unit than intended and agreed to a price 25 percent lower than its proposed maximum. Even so, the water utility's stock never exceeded the $1.25 billion IPO's price yesterday, the first day of trading.

Depa Ltd., a designer and installer of building interiors, had an equally lackluster debut yesterday after going public in Dubai and London to raise as much as $432 million. The price of the Dubai-based company's stock fell in both markets.

Hypermarcas Industrial SA has fared even worse since last week, when the maker of consumer and health-care products raised $420 million in Brazil's second IPO this year. The stock dropped in each of the first three days of trading, including yesterday, when it closed 8.8 percent below the initial price.

Even Intrepid Potash Inc., a fertilizer maker whose shares soared 58 percent when they began trading two days ago, pulled back yesterday. The stock dropped 2.6 percent after failing to sustain a 6.2 percent advance at the start of trading.

The moves show investors aren't exactly falling over themselves to buy into newly public companies -- and who can blame them? The Bloomberg IPO Index, tracking U.S. companies, has declined about twice as much as the Standard & Poor's 500 Index since the latter peaked on Oct. 9. An index of U.K. IPOs has tumbled 24 percent, one point more than the U.S. version.

Coming for Years

In an inhospitable market like this, anyone who wants to take a company public has to be highly motivated to proceed. RWE, Germany's second-largest utility, is a good example.

RWE had been working toward American Water Works' IPO since deciding to pull out of the water business in November 2005. The company, based in Essen, Germany, filed for the share sale last August and put it off three months later after stocks tumbled.

When the IPO was revived this month, RWE sought to unload a 40 percent stake at $24 to $26 a share. In the end, the company settled for 36 percent and $21.50, respectively.

American Water, owned by RWE since January 2003, regained its place as the U.S.'s largest publicly traded water company yesterday. The Voorhees, New Jersey-based company backed into that distinction, as its shares fell 4.2 percent to $20.60.

Depa fell 1.3 percent in Dubai and 2.6 percent in London after selling shares for $1.55 each, near the bottom of a $1.50 to $1.85 price range. The interior contractor's projects include Burj Dubai, the world's tallest skyscraper.

Deterrent Effect

Hypermarcas, based in Sao Paulo, declined 4.9 percent yesterday to record its biggest loss since the IPO. The stock dropped 1.8 percent in its first day of trading and 2.4 percent in the second.

The reception may discourage other companies from going public any time soon. Those that go ahead may have to prepare themselves for disappointing debuts. The same can be said for investors who buy their shares.

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Ambac Financial Group Inc., the second-largest bond insurer, has lost about as much money during the past three quarters as it earned in the preceding decade. What's worse is that the company can't expect business to rebound any time soon.

Since the third quarter of 2007, Ambac has piled up losses of $5.29 billion as the subprime-mortgage market's collapse has eroded the value of its debt guarantees. The total includes the $1.66 billion first-quarter loss that the company, based in New York, reported yesterday.

Ambac's net income totaled $5.27 billion from the third quarter of 1997 to the second quarter of last year. During that time, the company moved away from its roots as a municipal-bond insurer by backing collateralized debt obligations, tied into subprime loans and other assets.

New business tumbled 87 percent last quarter as borrowers went elsewhere for insurance and bond sales dried up. Even if credit markets recover, competition from the likes of Warren Buffett's Berkshire Hathaway Inc. may limit any turnaround.

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Liberty Mutual Group Inc. is offering far less for Safeco Corp. in a proposed $6.2 billion takeover than it did for Ohio Casualty Co. almost a year ago. This comparison shows how much the U.S. property and casualty insurance industry has worsened in the interim.

The $68.25-a-share offer values Safeco -- the namesake for the Major League Baseball stadium in Seattle, its headquarters city -- at 8.7 times earnings and one times revenue for 2007, according to data compiled by Bloomberg.

Ohio Casualty fetched 11.9 times profit and 1.6 times sales in the industry's biggest deal last year. Liberty Mutual, based in Boston, made its $2.7 billion offer for the Fairfield, Ohio- based company on May 7. Four days later, the Standard & Poor's 500 Property & Casualty Insurance Index peaked at a record.

The index has dropped 28 percent since then as companies reduce premiums, leaving them more vulnerable to catastrophe- related losses. Its price-sales ratio fell below one last month for the first time in five years, Bloomberg's data shows.

(David Wilson is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: David Wilson in New York at dwilson@bloomberg.net

Last Updated: April 24, 2008 00:01 EDT