Tumbling equity markets have prompted 24 companies this month to halt plans for initial public offerings, the most in at least a decade.
Tommy Hilfiger Corp, the fashion brand owned by London-based buyout firm Apax Partners Worldwide LLP, Denmark's Dong Energy A/S and Chinese department store operator Maoye International Holdings Ltd are among companies that have withdrawn or postponed sales, Bloomberg data shows.
"Unless we have a fairly dramatic shift, the IPO market is going to be pretty dormant," said Chris Kelly, head of the capital markets practice at law firm Jones Day in New York. "IPO investors don't want to buy into an investment that has a decent likelihood of going down."
The MSCI World Index fell 14 percent since reaching a record on Oct. 31 as subprime-mortgage defaults sparked a worldwide credit crisis and threatened to send the US economy into recession. The Bloomberg IPO Index, which tracks new stocks in their first year of trading, dropped 9 percent in the past year, while the Standard & Poor's 500 Index declined 6.4 percent.
Mexico, Sweden, France, Poland and Australia are among the more than 40 countries whose benchmark indexes have slumped more than 20 percent from their highs last year, the common definition of a bear market. Europe's Dow Jones Stoxx 600 Index has tumbled as much as 24 percent from a six-year high on June 1. In the US, the S&P 500 dropped 14 percent from its record reached in October.
Apax bought Hilfiger in 2005 for US$1.6 billion after its red-white-and-blue-splashed clothing lost favor with teenagers. Tommy Hilfiger, which first went public in 1992, had planned to return to the market by listing shares in Amsterdam.
The market decline derailed the IPO of Dong Energy, which would have been Denmark's biggest in more than a decade, while Maoye cited "current turmoil in international capital markets" for its scrapped plans.
Solargiga Energy Holdings Ltd and SFK Construction Holdings Ltd canceled Hong Kong IPOs worth as much as a combined HK$3.3 billion (US$423 million) after the stock market tumbled, four people familiar with the decisions said yesterday.
Global Green Tech Group Ltd, a Hong Kong-based maker of personal-care products, canceled a planned HK$2.41 billion IPO by unit Bio Beauty Group Ltd because of "market conditions."
In the US, the largest deal to get pulled was the US$345 million sale of Imperium Renewables Inc, a Seattle-based biodiesel producer, which withdrew due to "unfavorable market conditions."
The window is still open to go public. So far this year, 50 companies have raised US$7 billion in IPOs globally, up from US$2.1 billion in 43 issues last year during the same period.
The US IPO market accounts for 41 percent of the global tally, with nine firms having raising US$2.9 billion, Bloomberg data shows.
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