RPT-IPO View-U.S. IPOs dwindle in closed market in 3rd qtr

(Repeating item that initially moved on Friday)

By Phil Wahba

NEW YORK, Sept 28 (Reuters) - The market for initial public offerings in the United States continued its precipitous fall in the third quarter, dropping to levels not seen in more than five years.

The IPO market has reached near paralysis after a second quarter that had been the worst since early 2003. But the drop in IPO activity was even sharper in the third quarter, falling 80 percent from the prior quarter, with the outlook equally dim for the coming quarter.

Only four IPOs, led by solar equipment maker GT Solar International (SOLR.O), launched during the third quarter, yielding $930 million, according to quarterly league tables data released by Thomson Reuters. It is only the second time this decade that IPO proceeds have failed to reach the $1 billion barrier.

The handful of deals that did get out of the gate have all had negative returns, as investors grappling with the jumpy markets have eschewed unknown and unproven companies.

GT Solar, the period's largest IPO, valued at $500 million, is down more than 36 percent, while Texas-based Web-hosting company Rackspace Hosting Inc (RAX.N), which used an auction to price its $187.5 million IPO, is down about 11 percent.

"IPOs have no business coming public at a time like this," David Menlow, president of IPOFinancial.com said, pinning the bulk of the blame for the market's lethargy on the volatile markets. "Investors don't see a reason to buy IPOs."

But the lack of activity also reflects appropriate caution on the part of companies and underwriters, one banker said.

"What would be worse would be people aimlessly throwing companies out there and failing," said Mark Hantho, global co-head of equity capital markets at Deutsche Bank AG (DB.N). Better for them to wait, he said.

And they are waiting. There has not been an IPO in the United States in nearly two months. The last was Rackspace in early August.

"Any thoughtful adviser would not, in this environment, venture to take a company public -- there are other sources of capital," Hantho said, citing private equity funds, venture capital and private investments.

"Companies that need capital are exploring those alternatives and not forcing themselves into exceptionally uncertain market conditions."

The financial storm has been brutal to the companies that went ahead with their offerings.

The quarter saw a number of companies, including Kentucky coal company Rhino Resources Inc, attempt to price, only to withdraw when the market balked.

Last week, California-based laboratory systems maker Fluidigm Corp became the latest company to pull its IPO after several attempts to price a deal.