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Where Have All the IPOs Gone?

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    Renaissance Capital Principal Kathleen Smith on the low number of IPOs this December.

  • Duration 6:05
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You very much a 125.

Companies have gone public this year that's up 10% from last year.

Well why does December look so gloomy in terms of IPOs.

Let's bring in Cathy Smith principal amount of capital uses -- -- Union analyze the IPO market.

Why is their why is there's such.

Lack of IPOs for the month of December specially -- ten -- -- what's going on now the wasn't happening last year.

Well we're in -- state of market paralysis IPO market paralysis.

Relative to the fiscal -- so.

Companies are with someone to mobilize and certainly investors are when it comes to putting new money to work so it's a temporary.

Phenomenon but we are saying the lowest December we have seen in a very long time.

Looking at the years on our screen and it and it you know 2008 the December there was nothing but -- of course was the center of the financial crisis.

Where we go from here you -- a little bit did better expectations for 2013.

And it would make sense that companies are bit nervous about hitting the public markets.

But the markets have not been very receptive to many big names -- more.

Optimistic about 2013 mainly because.

Among -- -- of IPOs.

In the meanwhile the once have already come out are starting to perform well.

So that didn't happen until the last several months.

And the returns on IPOs we run a mutual fund the global IPO.

We're on and we also calculate indices called beef but -- Renaissance IPO indices both our funds and the indices.

Are up very well on a hat had.

Momentum toward the end of this year.

And so we'll see better returns now what will happen is those IPO returns will be get them investor interest tonight -- we expect to see that 2013.

You know it's funny because we talk about the -- IPOs in 2012 -- only think about FaceBook.

Which is still a new trading well below its IPO price at the same time there's a lot of withdrawals this year in the IPO market you have 437 companies file.

178 though.

Pulled out change their mind.

Well not only withdrawals but a third of the IPO's -- have been done this year are trading below their IPO price.

So even though the returns are good it's been a minefield.

And very important we research IPOs for institutional investors and researching these IPOs is important you can't just by any BI PO and do well it's a minefield.

They're and they're trying to trailing the general market so if you -- one of those IPO investors in 2012 whether it's FaceBook or some other names and -- -- in the market you're telling me S&P that's -- frustrating for a lot of people.

It is frustrating and that's -- for the IPO market to work we need to see the momentum that were starting to see now -- returns.

And then we will see the better issuance and levels that are gonna come in 2013.

We've got what 200 IPOs of about.

In a range right now expected next year we see about 200 in the pipeline it's down from a year ago I think companies are affected again by the economy.

We are for the first time seeing a decline in the IPO pipeline.

-- -- big names that you think might actually bucked the trend.

There are a lot of major companies coming in for example -- -- -- spin off its animal health care unit there's a lot of shareholder realizing shareholder value by big companies.

GM is looking at that spinning off the allied business the GMAC consumer finance business.

The there are just a long list of companies some very interesting that we'll see for -- thirteen.

OK Allan -- deals coming up wanna ask you about in particular -- -- I think is gonna be one of them are fascinating it's gonna be coming out.

-- -- solar panel installer but they're installer auto makers -- -- a lot of analysts are really looking about one.

These are five deals other left in the -- in the last a couple of extra got going on here audio oncology western gas equities PBG energy -- -- -- -- Right of those findings which sticks out to do well.

One of those five has priced and traded today is up 30% today that's western gas so now we're left with four.

We would be we think the solar city deals very controversial it's not just an installer to finance company.

Very difficult to understand and evaluate the risk of this company.

So we would say there's a high risk deal there we would be focusing more on the energy -- sister refiner in the pipeline that's the company called.

PB half.

They own refineries it's a very good segment right now they pay a dividend yield.

-- highlight that one in the silver city which has some of a residential REIT so so look at athletes -- thing.

OK so energy and loyalty but just posted a centrist think that's very -- -- -- -- -- company look at what this wireless.

Ruckus is an interesting one we -- highly of the company many investors stand.

-- price its IPO at the top of the range on the first day traded down 18% it -- that.

Just an IPO disaster today it's trading up over 15% above its IPO price.

What a turnaround -- so investors are coming back into look at these growth companies.

And that disaster the deal turned out not to be such a disaster and I -- FaceBook -- you do you say disaster of a deal.

Well certainly near term yes that we think long term it's a very interesting company.

Yes the stock dropped 50% off the IPO price and it to a bottom 1750.

Share it's now almost 28 dollars a share so if you bought the stock and October you would had a very nice gain.

Do you think the other FaceBook is one of the things that turn off.

IPO investors and unions and the biggest banks in this country.

Backing of several the IPOs we've just spoken about and yet the performances of -- rather not related to save you about that the appetite.

Well there's no doubt about FaceBook being one of those that costs the state of paralysis they were two things this year 2012.

Certainly FaceBook coffee IPO market to close down from month.

And then we're here at the command that the fiscal cliff which is closing market again I think most of us didn't think this year should have been a much stronger year than it turned out to -- So FaceBook with a big disappointment in the trading in -- -- -- challenging.

And we're you know we think that's something the market have to deal.

Well like it was ten years ago -- -- going to say to myself Kathy Smith thank you very much cat is that principle at Renaissance capital I don't wanna show you so.

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