Email  Print 

more capital articles

• Credit Crunch, Costs Tip More To Bankruptcy
• Where Candidates Stand With Small Businesses
• A Photobucket Bonanza, for Insiders
• Control Your Cash Flow
• Business Credit Cards Simplify Record Keeping

THE SECOND QUARTER of this year is to be the first in more than 30 years without a venture-capital-backed initial public offering in the U.S., according to a survey by the National Venture Capital Association, a U.S. trade body.

In the first quarter, there were five U.S. venture-backed IPOs, the lowest number since the second quarter of 2003, which had two issues, according to the trade organization. In Europe, there were two such IPOs in the three-month period, according to investment-banking research provider Dealogic.

Mary Ann Deignan, head of equity-capital markets for the Americas at UBS, said the general weakness in the U.S. IPO market and volatile conditions were a factor.

"Investors lack conviction, and IPOs are the highest risk a portfolio manager can take, she said. "Venture capital-backed companies typically represent new technologies, which add another layer to the complexity of the risk."

In the current quarter, all U.S.-listed IPOs have raised a total of just $5.2 billion, the weakest quarter since 1995, according to preliminary half-year data from Dealogic. In the first half of this year, the 57 withdrawn IPO filings exceeded the 31 deals that priced.

"For the situation to change there has to be a change in the risk paradigm, with fund managers no longer being able to find value in public markets and looking at new issues as an asset class

for performance," said Jonathan Biele, head of capital markets at Cowen Group, a boutique investment bank that specializes in growth companies.

Write to Shanny Basar at shanny.basar@dowjones.com