Magazine article Global Finance

IPOs Pulled Following Market Declines

Magazine article Global Finance

IPOs Pulled Following Market Declines

Article excerpt

A sharp drop in world equity markets triggered a host of cancellations and postponements of planned initial public offerings in early May. Many of the proposed IPOs will remain shelved for an extended period until confidence is restored to the markets, bankers say.

Several major deals that did come to market amid the turbulence stumbled badly in their debuts. Two big IPOs in Poland and South Korea performed well, however.

The $2.5 billion IPO of PZU, the partly government-owned insurer, rose more than 15% in its first day of trading on the Warsaw Stock Exchange. The Polish government plans to realize $10 billion from asset sales this year to help reduce its deficit. Power producer Polska Energia is the next government-owned company to be offered for sale this month, market conditions permitting.

Another offering that bucked the weak IPO trend was Samsung Life, based in South Korea, which raised $4.4 billion in the largest IPO worldwide to date. The insurer's shares rose nearly 4% in their first day of trading in Seoul on May 12. Goldman Sachs and Korea Investment Securities were lead coordinators of the offering. Bank of America Merrill Lynch, Morgan Stanley and Siiinhan Investment also managed the sale.

Most of the new equity offerings recently have found the market to be less welcoming. Essar Energy, the largest listing ever on the London Stock Exchange by an Indiabased company, fell 7.4% in its debut, after cutting the price and reducing the size of the offering to $1.^5 billion from a previously announced S 2. 5 billion. Indian conglomerate Essar Group, controlled by the Ruia family, sold 23.4% of its energy business in the IPO, which was handled by Deutsche Bank and J. P. Morgan Cazenovc.

Niska Gas Storage Partners, a Houston-based company that operates natural gas storage facilities in the US and Canada and trades gas for its own account, slid 6. …

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