Busy week a test of investors appetite for IPOs as huge list of companies waits to go public

By Tali Arbel, AP
Tuesday, September 28, 2010

Busy week a test of investor appetite for IPOs

NEW YORK — This week’s nine scheduled initial public offerings will be a crucial test of investors’ willingness to buy shares from the long list of companies itching to go public.

After a slow summer, this week may be the busiest since December 2007, with the largest IPO of the year expected from insurer Liberty Mutual Agency Corp. and three Chinese companies drawing intense interest.

This year, 193 companies have filed to go public, bringing the pipeline of companies eyeing the capital markets for funds to the highest level since 2007, according to IPO researcher and investment group Renaissance Capital of Greenwich, Conn.

Turbulent capital markets and economic uncertainty have kept a lid on the pace of corporations actually hitting the market, however. Since the beginning of July, 28 companies have gone public, while 10 canceled their plans. It’s a marked improvement from the past two years, but still a more muted environment than the summer of 2007, before the recession struck.

Five companies have gone public so far in September. Of those, three have logged double-digit gains for investors. SouFun Holdings Ltd. has risen 53 percent since its debut on Sept. 16, SciQuest Inc. is up 23 percent since Sept. 23 and Country Style Cooking rose 48 percent Tuesday. Amyris Inc. also closed up 3 percent on Tuesday after pricing below expectations, which has historically been a sign of weak demand.

The successes of September could give a nudge to businesses that have been sitting on their share offerings, waiting out a bad stock market.

“I see an extremely strong fourth quarter. The pipeline is the biggest it’s been in years,” said IPO Boutique analyst Scott Sweet. Barring another meltdown in stock markets, investors can expect a rush of IPOs for the rest of the year. High-profile companies such as Toys R Us are more likely to wait until next year, however, he said.

The rest of the lineup for this week includes Liberty Mutual, one of the country’s biggest property and casualty insurers. Liberty Mutual expects to raise as much as $1.29 billion, which would be the largest initial public offering since the October 2009 debuts of Verisk Analytics Inc. and Banco Santander SA.

There are also two other Chinese companies expected go to public that may be “red hot,” Sweet said: wind turbine manufacturer China Ming Yang Wind Power Group Ltd. and Internet content company ChinaCache International Holdings Ltd. He also said student housing developer Campus Crest Communities Inc. should do well.

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