Slow quarter closes awful year for U.S. IPOs

By Phil Wahba

NEW YORK (Reuters) - A $126-million initial public offering by online university operator Grand Canyon Education Inc (LOPE.O) in November spared the U.S. IPO market from being completely idle in the final quarter of 2008 -- a year to forget for most IPO participants.

With no more IPOs on the calendar this year, 2008 is set to end with only 29 deals, yielding $26.4 billion, down 43 percent from 2007, when 202 IPOs generated $46.3 billion.

The year would have been even worse had it not been for the mega-IPO in March by Visa (V.N), the largest ever in the United States.

Without the credit-card operator's $17.9 billion offering -- more than two-thirds of the year's proceeds -- it would have been the slowest IPO market since 1990, when 181 IPOs raised $5.4 billion, according to Thomson Reuters. As it was, it was the slowest since 2003.

Frazzled by the economic and financial crises, investors have stayed away in droves in 2008, sending down one IPO stock after the next, and keeping dozens of prospective companies from the public markets.

"This is dramatically different from other slowdowns because it's been caused by a fundamental shaking and quaking of our financial system," said Mary Ann Deignan, head of equity capital markets for the Americas at UBS Investment Bank.

"That has caused everyone to become more conservative -- this is a reset of what people believed their wealth to be."

That anxiety took its toll on IPOs.

Volatility, aggressive withdrawals from mutual funds and hedge funds, and contracting stock prices all conspired for "a lousy IPO market," said Doug Baird, co-head of equity capital markets at Banc of Americas Securities LLC (BAC.N).

FUMBLING CLASS OF 2008

Of the 29 IPOs that did launch in 2008, only five are trading above their offer price, including Visa, Grand Canyon, and health-care company CardioNet (BEAT.O).

Most of the rest of the Class of 2008 has performed dreadfully, including some of the most anticipated deals.

After a $960 million IPO by fertilizer maker Intrepid Potash Inc (IPI.N), its shares jumped more than 50 percent in their April debut; at the close of trading on Thursday, they were 37 percent below the offer price.

Solar equipment-maker GT Solar International Inc (SOLR.O), which raised $500 million in July, has fallen 82 percent, while shares in RHI Entertainment (RHIE.O), which makes and distributes made-for-television movies, are down about 66 percent since the company's $189 million IPO in June.

Last week, Verso Paper (VRS.N), which went public in May with a $168 million IPO, was warned by the New York Stock Exchange its market capitalization was too small and it risked delisting. Its shares are down 90 percent since the IPO.