NEW YORK – By December 2000, it was clear that the market for IPOs was headed for a long winter. In that month, only 15 companies went public versus 33 in December 1999.
At the time, market watchers consoled themselves with the thought that the slowdown would improve the quality of the deals making it past the starting gate. And in fact, of those 15 new issues from December 2000, eight have outperformed the S&P 500 since their debut. Six now trade above their opening price.
A year later, the market for new issues is still in the doldrums. Deal volume remains thin, even for a seasonally quiet December. Just ten offerings are scheduled for December 2001.
As for deal quality, the December schedule features established companies in aluminum, defense, food service and insurance. While these sectors don’t promise explosive growth, Randall Roth, senior analyst at Renaissance Capital, predicts significant demand for these stocks, as investors look for reliable names at reduced prices.
Example: Prudential Financial, a Newark, N.J.-based insurance and financial services concern with $606 billion in assets under management. The firm’s IPO, which will convert it from a mutually held company to a public one, is set to price on Dec. 13.
Full story at Forbes.com