PHILADELPHIA, June 28 Companies raised more than $31 billion in U.S. initial public offerings in the first half of the year, which was capped by a rocky debut for private equity firm Blackstone Group LP (BX.N).
The value of U.S. offerings in the first half of 2007 rose 37 percent compared with the same period a year ago, according to preliminary data from research firm Dealogic.
The number of deals so far this year totaled 146, up from 116 in the same period a year ago, with the finance and technology industries representing more than half of the debuts, Dealogic said.
But just as private equity firms have grabbed merger headlines, they have also dominated the IPO market due to the size of the Blackstone offering, analysts said.
Blackstone, which last week raised over $4 billion in the largest U.S. IPO in five years, gained 13 percent on the first day of trading but stumbled after that. Blackstone units closed on Thursday at $29.69, down 4 percent from its $31 IPO price.
Investors have fretted that the private equity boom may have peaked and that a bill in Congress could raise the tax rate on the profits of publicly traded buyout firms.
"This is a broken IPO: it's below its issue price. But this is not a stock that has been abandoned," said David Menlow, analyst at IPOfinancial.com.
"All the weakness this week has been about pending tax hits. That got people very, very nervous. People will understand that the company is still best of breed," he added.
Other private equity firms weighing IPOs include Kohlberg Kravis Roberts & Co. [KKR.UL] and TPG Capital [TPG.UL], sources have previously said. Yet Blackstone's performance and concerns about the buyout market may derail those plans, analysts said.
"The private equity area has topped out. The interest rates are higher and the covenants and restrictions (on loans) are tightening," said Francis Gaskins, president of IPO research firm IPOdesktop.com.
Carlyle Capital Corp. Ltd., an affiliate of private equity firm Carlyle Group [CYL.UL], on Thursday cut the price of a planned IPO in Amsterdam, citing market "headwinds." The company said it expects to launch a revised offering next week after re-filing its application with Dutch market regulators.
"I think if the Blackstone offering can't get back above issue, then Carlyle may not be able to get their deal done," Menlow said.
Concerns about rising interest rates and capital markets giving money under less-favorable terms will have a ripple effect on other sectors, Gaskins said.
"It becomes hard for companies to grow if their revenue growth is interest-rate sensitive. Those types of companies will be less favorably received" by the IPO market, he said.
June marked the busiest month of the past 18 months, according to Dealogic, with $8.5 billion in offerings.
Excluding REITs and special purpose vehicles, or blank- check company IPOs, the average one-day return in the first half of the year was 10.1 percent, up from 8.8 percent a year ago, Dealogic said.
Behind the Blackstone IPO, the largest U.S. offerings this year included the $1.3 billion IPO of wireless phone company MetroPCS Communications PCS.N and the $882 million offering of movie theater advertiser National CineMedia Inc. (NCMI.O).