IPOs Suffer as Douglas Dynamics Cuts Size, GSW Delays
Douglas Dynamics Inc. cut the price of its initial public offering, while China’s New Century Shipbuilding Ltd. and Germany’s GSW Immobilien AG shelved sales as a widening government-debt crisis roiled the IPO market.
Douglas Dynamics, the Milwaukee-based maker of snowplows, raised 30 percent less than it originally sought yesterday, a filing with the Securities and Exchange Commission and Bloomberg data showed. New Century canceled a $483 million IPO that would have been the biggest in Singapore this year, and GSW pulled its $591 million offering.
The price reductions and postponements came as the MSCI World Index of equities tumbled by the most in three months on deepening concern that a sovereign-debt crisis is spreading to Spain and Portugal. Essar Energy Ltd. slumped on its first day of trading in London yesterday as gauges of stock-market volatility in Europe and the U.S. surged at least 15 percent.
“When markets are elevated, investors look for any reason to sell,” said Eric Boughton, a Portland, Oregon-based fund manager at Deschutes Investment Advisors, which oversees $800 million. “Global IPOs may struggle over a short time period within the next few weeks. Companies want to wait for a day when the markets are a little calmer.”
IPOs stumbled as stocks declined around the world yesterday on renewed concern that more European countries will be ensnared by the debt crisis that forced Greece to take a 110 billion-euro ($143 billion) international bailout.
VIX, VStoxx Surge
Indexes that measure the cost of using options to protect against stock declines also jumped yesterday. The VIX, as the Chicago Board Options Exchange Volatility Index is known, rose 18 percent, while Europe’s VStoxx Index increased 15 percent.
The stock-market slump threatens what may be the busiest week for U.S. IPOs this year, with as many as eight companies scheduled to offer shares, according to Bloomberg data.
Douglas Dynamics sold 10 million shares at $11.25 each after cutting its range to $11.25 to $11.75, according to its SEC filing and Bloomberg data. The company backed by Los Angeles-based Aurora Capital Group and Ares Corporate Opportunities Fund LP had planned to sell the stock at $14 to $16. The shares rose 0.4 percent to $11.29 in New York Stock Exchange trading.
Credit Suisse Group AG of Zurich and New York-based Oppenheimer Holdings Inc. were hired to lead the sale.
Americold Realty Trust, the Atlanta-based warehouse operator owned by billionaire Ron Burkle’s Yucaipa Cos. that was scheduled to sell $688 million of shares in this year’s biggest U.S. IPO, pushed back its pricing to today from yesterday.
The real-estate investment trust cut the midpoint price for the offering by 33 percent.
While U.S. REITs have climbed 16 percent this year, Los Angeles-based private-equity firm Yucaipa had asked for a higher valuation for Americold than for any REIT that owns warehouses or industrial properties except one, Bloomberg data show. New York-based Goldman Sachs Group Inc. and JPMorgan Chase & Co. were hired to manage the deal.
Charm Communications Inc., a Beijing-based television advertising agency, sold $74.2 million of American depositary receipts at $9.50 each yesterday, within the forecast price range of $9 to $11, according to Bloomberg data. The shares slipped 1.1 percent to $9.40 in Nasdaq Stock Market trading.
Outside the U.S., New Century said it will consider restarting its IPO in the “near future,” without giving a reason for withdrawing, a statement on the Singapore Exchange Ltd.’s website showed. New Century, based in Jingjiang in southeastern China, was scheduled to sell 560 million shares at a maximum price of S$1.19 each today, Bloomberg data showed.
The company initially sought as much as S$1.5 billion ($1.1 billion), two people with knowledge of the matter said last month. The original amount in U.S. dollars would have been the largest IPO ever by a Chinese company in Singapore, Bloomberg data show. UBS AG of Zurich was hired to lead the sale.
New Century scrapped the IPO because the Singapore exchange received a complaint that a lawsuit against a unit wasn’t mentioned in the prospectus, the Business Times daily said today, citing unidentified people. Sino Noble, New Century and the Singapore exchange declined to comment when contacted by Bloomberg News.
GSW, the real estate company owned by Goldman Sachs and New York-based Cerberus Capital Management LP, postponed its 455.7 million euro initial offering, citing “increased volatility and uncertainty in global equity markets.” The Berlin-based owner of 50,588 properties tried to sell 24.63 million shares at 15 euros to 18.50 euros each, its April 23 prospectus showed.
Essar Energy tumbled 7.3 percent on its first day of London trading after India’s second-largest private power producer raised 1.27 billion pounds ($1.95 billion) in its IPO last week. The unit of India’s Essar Group had cut the offer price to 420 pence from a range of 450 pence to 550 pence.