Companies in the world's biggest economy are going public at the slowest pace in a quarter century.
Six companies in the US completed initial public offerings in the third quarter, including CIT Group Inc. Dozens more canceled sales as slumping stock markets sapped demand and kept offerings to their fewest since 1977, according to Jay Ritter, a University of Florida professor who tracks IPO history.
Wall Street hasn't seen a quarter this slow since Jimmy Carter was in the White House and Elvis Presley was still alive.
Many of today's investment bankers were just out of grade school.
"There are very few people working who ever had the opportunity to see a market quite as challenging as we're in right now," said Larry Wieseneck, head of US equity capital markets at Lehman Brothers Holdings Inc, which ranked second for the quarter behind Goldman, Sachs & Co after they jointly managed CIT's US$4.9 billion sale, the largest of the year. Wieseneck, 36, was in junior high school in 1977.
A two-year slump in initial stock sales, which can generate fees as high as 7 percent, in part triggered the biggest round of Wall Street lay offs since the late 1970s and caused FleetBoston Financial Corp to close its Robertson Stephens Inc investment bank. The bank catered mainly to computer-related companies, which went public in record numbers in 1999 and 2000.
As the NASDAQ Composite index slumped 15 percent in the quarter, falling in 10 of the 13 weeks, more than a dozen companies abandoned IPO plans at the last minute. Merck & Co tried several times to complete the US$1 billion offering of its Medco Health Solutions Inc unit before canceling the offering in July. Last week, LipoScience Inc scrapped its US$80 million offering after two attempts.
Others with tentative schedules pushed their sales back to next quarter.
Those that did go public sold their shares for less than they anticipated. CIT sliced its offering by a third before finding willing buyers. Kirkland's Inc, a retailer of home decorating items, also raised a third less than planned.
Proceeds from US IPOs have slumped by a third this year, raising US$21 billion from more than US$30 billion last year. In the same period last year, 15 companies went public. In 2000, 138 went public in the third quarter, according to Dealogic LLC. Those companies that did make it this year all went public in July.
August and September were shutouts, the first two-month stretch without an IPO since 1974, Ritter said.
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