Recently, New York-based KGB
filed a request with the US
Securities and Exchange Commission (SEC) to cancel its $250 mn
Initial Public Offering (IPO) because of unfavorable market conditions. The
directory assistance provider KGB, which provides phone numbers and
addresses to businesses and individuals on the telephone, had planned to use the
IPO proceeds in part to repay a portion of outstanding debt and to help fund
future strategic acquisitions. With this withdrawal, KGB becomes the
14th company, since 2003, to cancel or
postpone IPO in a market that remains a tough place for new stock floatations.
There have only been two deals in the past eight months in the US and
practically speaking, the market for IPOs in US has ground to a halt. Just one US
company, Mead Johnson Nutrition (MJN), the New Jersey-based high-end
infant formula producer, has made its stock market debut so far this year.
However, one other outfit, a newly formed Real Estate Investment Trust (REIT)
called Madison Square Capital, has little chance of going public soon.
With this, the US IPO market is entering into its second year of
drought, with new listings few and far between. Some market analysts are
comparing the current situation with the years following the market turbulence of
1973. In the ensuing three years after the 1973 market crash, there was
virtually no IPO activity. The firms that came to market subsequently were
fundamentally robust companies. Some analysts are anticipating a repetition of the
post 1973 situation. |
