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US IPO Pipeline Slowing as Companies Withdraw, According to Ernst & Young LLP Data
added: 2009-02-10

The number of companies remaining in the IPO pipeline dropped to 57 by the end of the fourth quarter (31 December, 2008), about a 30% decrease from the end of the third quarter (30 September, 2008), according to the quarterly Ernst & Young LLP US IPO Pipeline study.

Though the number of companies in registration has gone down substantially in the fourth quarter, the total amount of capital companies are seeking to raise decreased by less than 12% from the third quarter. Thus, the average deal size rose to $272.7 million in the fourth quarter, up from $231.4 million in the third quarter.

In the fourth quarter, 16 companies withdrew or postponed their IPO and one went effective. Another 14 companies were removed from Ernst & Young LLP's report because they sat in the pipeline for more than a year.

According to Maria Pinelli, Americas Director, Strategic Growth Markets, Ernst & Young LLP, some experts are optimistic the IPO market will open up again in the third or fourth quarter of 2009. "We're likely to see the first signs of life in the pipeline from larger companies in established industries, rather than a surge from smaller companies."

"It's important to have a long-term perspective," said Jackie Kelley, Americas IPO Leader, Ernst & Young LLP. "If companies want to position themselves to ride the first wave up as the IPO market turns around, they should start planning now for the organizational change, which can take 12-24 months."

In the fourth quarter, technology, diversified industrial products and professional firms and services lead among new issuers, with 12, seven and six companies in registration, respectively. The biotechnology sector represented the most withdrawals with seven companies exiting the pipeline.

California had the most companies in registration, with eight companies seeking to raise $855 million. Texan companies filed to raise the most capital (six companies, $1.3 billion). Nine foreign companies registered to go public in the US, including five from China (seeking to raise $505 million) and one from Hong Kong (seeking to raise $725 million).

Source: PR Newswire

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