IPOs Fizzle in Second Quarter

Offerings drop 34% as Facebook debut, European crisis scare away buyers.

Initial public offerings fell 34 percent this quarter as Facebook Inc.’s disappointing debut and worsening economic conditions rattled investors, pressuring companies to lure buyers with cheaper valuations.

IPOs globally raised $41.3 billion, the worst second quarter since 2009, data compiled by Bloomberg show. That compared with $62.7 billion a year ago. At least 50 companies shelved sales as Europe’s debt crisis spread, growth prospects slowed in China and Facebook’s stock sank 17 percent from its May 17 IPO price.

U.S. IPOs

U.S. IPOs rose 67 percent this quarter to $22.7 billion, buoyed mainly by Facebook’s $16 billion sale and Carlyle Group LP’s May 2 IPO. ServiceNow Inc., the maker of cloud-based business software, raised $210 million in its IPO yesterday, pricing the shares above the proposed range. The shares gained as much as 33 percent in the first day of trading in New York today.

Morgan Stanley’s Dominance

Given the lack of demand, Joe Reece, global head of equity capital markets at Credit Suisse Group AG, said he’s advising most IPO clients to expect good conditions for a sale early next year.

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