IPO Withdrawals Are Normal, Analysts Say

NEW YORK (AP) -- The number of companies withdrawing their planned initial public offerings citing current market conditions this year isn't evidence that the IPO market is weakening, analysts say.

Certainly, the volatility of the markets the last few weeks, driven by the distress in the subprime mortgage industry, has shaken investor confidence. But the number of companies withdrawing their IPOs isn't any greater than last year at this time, according to research from Renaissance Capital's IPOHome.com.

Some of the recent IPO withdrawals include real estate investment trust LNR Capital Corp., solar cell maker Photowatt Technologies and voice messaging software company GenuTec Business Solutions Inc., according to regulatory filings.

As of Aug. 31, 25 companies have withdrawn their IPOs this year, versus 27 companies as of this time in 2006.

What's even more promising is the strength of deals this year, said Sam Snyder, senior analyst at Greenwich, Conn.-based IPOHome.com.

Year to date, there have been 150 IPOs raising a total of $36.7 billion, compared with 105 IPOs this time last year, raising $22.6 billion, he said.

There have been a few stand-out deals this year, namely Blackstone Group, which raised a record $4.1 billion.

Overall the IPO market in the first half of 2007 has been strong and the number of withdrawals has been normal, Snyder said.

Brian Hamilton, chief executive of IPO research firm Sageworks Inc., agrees that the recent withdrawals aren't cause for alarm. Companies that withdraw because of market conditions are often ones that shouldn't go public in the first place, he said. When companies start timing their IPOs to market conditions, that's a red flag that maybe the deals weren't that strong, he added.

Investors are interested in companies that will have a successful IPO regardless of current market dynamics.

"If a company has strong operating performance, I don't think it matters that much how the market is doing," Hamilton said.