Japan’s worsening nuclear crisis sparked a selloff in global stock markets that’s damping demand for new equity, causing delays in initial public offerings for ISS (ISS) A/S and Lagardere SCA’s (MMB) Canal Plus France stake.
ISS, the cleaning-service provider owned by Goldman Sachs Capital Partners and EQT Partners AB, said today it’s postponing its IPO after cutting the top end of its price range yesterday. Lagardere, France’s largest publisher, yesterday delayed the initial share sale of Canal Plus because of market volatility.
Stocks plunged this week after two nuclear regulators overseas said fuel rods at the Fukushima Dai-Ichi power plant may be exposed and could be leaking radiation. The fallout from Japan’s earthquake, which followed weeks of unrest spreading across the Middle East, may jeopardize a global recovery in IPOs that started to take hold in 2010 after the worst two years for new stock sales since 2003.
“I don’t think anyone’s in a particular hurry to get their deal out right now,” said Timothy Cunningham, a manager at Santa Fe, New Mexico-based Thornburg Investment Management, which oversees about $78 billion. “Developments in the Middle East and Japan have created uncertainty, and nobody likes uncertainty.”
Last year, Asia accounted for 7 of the 10 biggest IPOs and raised more than any region since Bloomberg began tracking the data in 1999. Asian companies sold $115 billion of new shares in 2010, compared with $91 billion for the rest of the world, according to data compiled by Bloomberg.
Top Spring International Holdings Ltd. (3688), a Chinese property developer, raised $200 million in a Hong Kong IPO after pricing shares at the low end of an offer range, two people with knowledge of the matter said.
The volume of U.S. IPOs this year has more than tripled to $13.4 billion from the year-earlier period, while the amount of initial public offerings in Western Europe has more than doubled, Bloomberg data show.
The effects of Japan and the Middle East will probably be temporary, and the global economic recovery may still help IPO fundraising this year match 2010, said Nick Einhorn, an analyst at Renaissance Capital LLC, a Greenwich, Connecticut-based IPO research and investment firm.
“There might be companies who just decide to wait a bit and see what develops,” Einhorn said in a phone interview. “It would take a lot more than a few rocky weeks to get companies to a point where this market is too volatile or down too much to want to pursue an IPO.”
At least eight companies this week announced plans for U.S. IPOs, data compiled by Bloomberg show. FriendFinder Networks Inc., the publisher of Penthouse magazine, revived plans for a share sale today after postponing an attempt to raise as much as $240 million last year. Cornerstone OnDemand Inc., the provider of management-training software for businesses, raised $137 million in its IPO this week, 18 percent more than expected.
Other companies joined ISS and Canal Plus in delaying plans. Global Market Group Ltd., the Guangzhou, China-based company that helps domestic businesses make contact with international customers, postponed its $143 million U.S. IPO.
Japanese drugmaker RaQualia Pharma Inc. said on March 15 it would put off an IPO. Also that day, Apollo Global Management LLC (APO) postponed releasing the terms of a share sale, according to two people with knowledge of the matter. Market conditions will determine when the New York-based private equity firm will schedule its roadshow to market the sale, the people said.
TUI AG (TUI1) may push back an offering of its stake in container line Hapag-Lloyd, three people familiar with the matter said.
Glencore International AG, the commodities trader that has been studying a $10 billion IPO, lost $3.4 billion in listed mining-company investments in the past month. Some investors said that drop in value may be a setback. The Baar, Switzerland-based company told banks on Feb. 28 and March 1 it was exploring a share sale in London and Hong Kong, two people with knowledge of the talks said at the time.
Lagardere, based in Paris, may raise more than 1.35 billion euros ($1.89 billion) from the Canal Plus France IPO, people with knowledge of the matter said in February.
“If the crisis is more prolonged, you should expect deals to get canceled, because the risk capital is just going to dry up,” said Josef Schuster, the founder of Chicago-based IPOX Capital Management LLC, which oversees about $2.5 billion.
“The longer it continues, the bigger the drag on IPO issuing activity will be, and the higher the likelihood that the deals coming to market will need to priced very attractively,” Schuster said.
Porsche SE, the sports-car maker that plans to merge with Volkswagen AG (VOW), said today a timetable to sell 5 billion euros in shares still stands. Topaz Energy & Marine Plc, a Dubai-based oil and gas contracting company, started its London IPO seeking to raise about $500 million.
The biggest U.S. IPO since Visa Inc.’s record $17.9 billion sale in 2008 may also take place this year.
Groupon Inc. has held talks with banks about an initial public offering that would value the online-coupon company at as much as $25 billion, according to two people with knowledge of the discussions.
The S&P 500 reached its 2011 peak on Feb. 18 before the biggest daily decline in more than six months as government violence against protesters escalated in Libya, the holder of Africa’s largest oil reserves. Crude rose to a 2 1/2-year high on the unrest.
Greenwich Kahala Aviation Ltd., the Dublin-based leaser of commercial airplanes, scrapped its plans this month for a $180 million U.S. IPO because of falling stocks and rising oil prices, Chief Executive Officer Bradley Smith said in a telephone interview this week.
“There was concern that the stock might trade off immediately following the IPO,” Smith said. “You really need the psychology of the market to be bullish, not bearish.”