There Have Been No IPOs in the US for 10 Weeks (That’s a Record!)

The WSJ is reporting today that, in the US, there hasn’t been an initial public offering for 10 weeks. That’s a record since Thomson Reuters began tracking those stats in 1980.

So who was the last to go public then? Well, a company called Rackspace Hosting Inc (a server hosting company) takes the honour, having had an IPO on August 8th. And what exactly happened there? Well, their IPO was a Dutch Auction (in a Dutch auction the auctioneer starts with a high price, then lowers it until people start bidding – explanation here). Rackspace expected to get $17 a share, but ended up getting $12.50. Then the price dropped 20% in the first day. Then it dropped more, and more and… now it lies at $5.66. Here is a little contemporary run-down of Rackspace’s IPO, which gives you an idea of why it might have been the last for a while.

So, investors might not be so hot and ready to go through the same slippery descent again. And companies looking to raise capital (which many need to) may be too scared about what could happen to their expected share price if they try to break the 10 week old ice with the public. It looks like it may be a while before we have another IPO.

Posted by Daniel Stacey in Hot Money | October 21, 2008 10:39AM |