IPO volume falls sharply in 3rd quarter

NEW YORK - Initial public offerings during the third quarter fell to their lowest levels since the second quarter of 2003 due to continued volatility in the equity markets and the ongoing credit crisis, according to PricewaterhouseCoopers' quarterly U.S. IPO report.

A total of 12 offerings raised $1.9 billion during the third quarter, which is the smallest quarterly result since five IPOs raised $1.6 billion during the second quarter of 2003.

There were 48 IPOs totaling $11.9 billion during the third quarter last year.

Third-quarter IPOs included GT Solar International Inc., which initially priced at $16.50. Its shares were trading at $4 in afternoon trading Wednesday. Raxspace Hosting Inc., which went public in July at a price of $12.50, was trading at $5.50 Wednesday afternoon.

Through the first nine months of this year, 54 IPOs raised $31.2 billion, with more than half of that coming from Visa Inc.'s $17.8 billion IPO. There were 195 IPOs totaling $44.7 billion during the first nine months of 2007.

"The crisis in the credit markets and prolonged volatility in the equity markets are deterring companies from pursuing IPOs," Scott Gehsmann, a capital markets partner in PricewaterhouseCoopers' transaction services group, said in a statement. "Issuers will continue to defer equity offerings until some stability is restored and investors regain confidence in the U.S. financial system."

As of Oct. 7, 73 planned IPOs were either postponed or withdrawn, compared with 16 for the same period in 2007. Non-U.S. issuers also were avoiding the IPO market during the third quarter. Only five non-U.S. issuers completed offerings during the third quarter, compared with 11 during the same quarter last year.

"While some backlog of deals exists, the prolonged credit turmoil and the impact on the equity markets are discouraging good companies with sound business models from accessing the US capital markets," Gehsmann said, noting investors are holding onto cash amid market uncertainty. "As IPO volume continues on a downward spiral, we anticipate that the number of IPOs in 2008 will be lowest in the last five years."

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