The following is an excerpt from BARBARA ORTUTAY | Jul 13, 2012 | Yahoo.com |
NEW YORK (AP) — With new public stock offerings for guitar maker Fender and travel booking website Kayak on deck next week, there are signs demand is starting to grow for IPOs after a five-week freeze triggered by a steep decline in financial markets and exacerbated by Facebook’s rocky May 18 debut.
Five companies are scheduled to go public next week alone, including Fender, Kayak and Palo Alto Networks, a maker of computer network security products. After Facebook, just four deals made it to market by the end of June, marking the longest stretch without an initial public offering of stock since August-October 2011. Stocks sank then in the wake of the U.S. debt limit showdown and a deepening European financial crisis.
The resurgence now is a welcome indication that dealmakers are regaining confidence about raising money through IPOs.
But the situation is far from rosy.
There are 68 companies expected to raise $14.4 billion through IPOs later this year, according to research firm Dealogic, Last year at this time there were almost double that amount of companies — 135, looking to raise $23.6 billion.
“If the market stays healthy — the overall market — I think we will see a lot of IPO activity in the second half,” said Nick Einhorn, an analyst with Renaissance Capital. But another plunge in stock markets could make it difficult for companies to raise money by selling shares.
The types of companies that try to raise money will also affect the IPO market. Mutual funds and the other big investors who tend to buy IPO shares are less likely now to be attracted to technology companies like social networks and games maker Zynga Inc. They’ve shifted to business technology companies such as Palo Alto Networks, which they consider more stable.
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