RPT-IPO VIEW-Weak U.S. financial markets dampen IPO outlook

(Repeating item that initially moved on Friday)

By Jessica Hall

PHILADELPHIA, Jan 13 (Reuters) - Wall Street's weak start for 2008 may chill prospects for initial public offerings, forcing small, young companies to consider other options for raising capital.

The Dow Jones industrial average and the broader S&P 500 Index have dropped more than 4 percent already this year, with financial stocks suffering from concerns about subprime mortgage losses, consumers' late credit payments and the slowing economy.

It's not a great time to jump into the market.

"Certainly, the broader market fundamentals auger a questionable start for the IPO market," said David Menlow, president of IPOfinancial.com.

Menlow cautioned, however, that it may be premature to write off the IPO market for the year.

"January historically is very slow. The IPO market doesn't typically get jump-started until three to four weeks into the year," he said. "Regardless, IPOs will not be the tail that wags the dog. The IPO market will follow the broader market."

Polaris Acquisition Corp, a blank-check company, is slated for debut, while three companies are scheduled for this week, according to research firm Dealogic. Blank-check companies typically raise money for future mergers or acquisitions.

It may take several more weeks for the IPO deal calendar to heat up, analysts said. There are currently 145 deals with an estimated value of $38.1 billion expected to go public this year, according to Dealogic.

That number should rise as companies file for offerings throughout the year, but analysts said the pace of 2008 may fail to match 2007, when a total of 286 deals raised $65.2 billion, Dealogic said.

"The sell-off during the first week of the year was not a good portend for the IPO market," said Jay Ritter, professor of finance at University of Florida. "But little blips up and down wouldn't have a lasting impact. A longer, broader decline, though, would hurt (the IPO market)."

Last year marked the strongest IPO market since 2000, when more than $105.3 billion was raised from 431 deals, according to Dealogic.

Still, despite 2007's strength, 85 IPOs were withdrawn last year -- the largest number of canceled IPOs since 2001, the research firm said.

Since mid-2003, the U.S. IPO market has remained roughly stable at about 15 debuts each month, Ritter said. That stable pace, however, is about half the volume seen in the market boom of the late 1990s, he added.

DELAYED REACTION

The companies that plan to debut in January filed for their IPOs several months ago. Polaris, for example, filed in August.

So this month's rate of offerings is more a reflection of market conditions in the third and fourth quarters of 2007 than this week's market flux, analysts said.

"I would expect that the rate of deal filings over the next several weeks will be a leading indicator for the IPO market's prospects for the spring," Ritter said. "Filings are the leading indicator. And when the market is as turbulent as it is now, companies tend to wait on filings."

OTHER OPTIONS

A cool IPO market does not necessarily kill the options of companies seeking to raise funding, analysts said. Companies could consider takeovers or investments by other companies to gain extra funding.

The volume of mega-mergers has cooled since July 2007, but private equity funds still have massive war chests. Buyout firm TPG Capital is raising a new $18 billion fund, according to media reports.

Tight credit markets have made large buyouts difficult to finance, but acquisitions of small and mid-sized companies remain feasible, Ritter said.

Often, companies that consider going public also quietly seek out potential buyers and decide in the end which outlet -- going public or accepting a takeover -- would be most fruitful, investment bankers said.

"Because private equity firms still have money to spend and corporations are still looking to make smart strategic acquisitions, there is a viable option other than the IPO market for many companies," Ritter said. (Editing by John Wallace)