Slump in confidence hits IPO offerings

Published on Sunday 5 October 2008 21:58

GLOBAL fundraising has fallen to its lowest level in more than five years, as volatility causes companies to shun turbulent markets.

According to data published today, the number of initial public offerings (IPOs) worldwide fell to 159 in the third quarter of the year, raising just $13.1 billion (7.4bn), the lowest level since the second quarter of 2003.

The figures, compiled by professional services firm Ernst & Young, show the fall was even more stark in the UK, where there were only five listings during the quarter. None was on the main market, with five Aim-listed firms raising $134 million. In the previous quarter, 18 companies floated, raising $5.1bn.

Neil Patey, a partner at Ernst & Young said the fall in activity was understandable given the economic uncertainty. "Businesses who may have considered raising finance through an IPO in recent times have put plans on hold while they wait to see if the UK markets recover," he said.

Patey added: "Alternative funding sources are available for growth and for survival, but these have also become harder to access."

Last quarter's fall continues a decline of previous months. In the first three quarters of 2008 there have been 676 IPOs, raising $92.5bn. This is less than half of the first nine months of 2007, when 1,388 companies went public, raising $185bn.

The fall appears not to stem from a lack of demand, but a loss of confidence. Data from Dealogic shows 242 IPOs have been postponed or withdrawn in 2008 against 169 in the whole of 2007.