IPOs Slump to Lowest Level Since Financial Crisis

Economic slowdown and Facebook's disappointing debut curbed 2012 offerings.

Initial public offerings in 2012 slumped to the lowest level since the financial crisis as signs of an economic slowdown and Facebook Inc.’s disappointing debut curbed demand and prompted companies to push back sales.

IPOs have raised $112 billion worldwide this year, the least since 2008, according to data compiled by Bloomberg. Initial sales in western Europe dropped to one-third of last year’s level, while concern about China’s economy helped cut proceeds in Asia by almost half. U.S. offerings raised $41 billion, little changed from last year, as Facebook’s IPO spurred a monthlong drought in U.S. deals.

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In Europe, the fourth quarter was this year’s busiest for IPOs, picking up even after the region’s economy shrank for the second quarter in a row during the July-September period. IPOs in Europe since 2007 haven’t managed to recover to even half of their pre-crisis level, data compiled by Bloomberg show, as concerns over sovereign debt across the region have persisted.

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While a resolution to avert the so-called fiscal cliff in the U.S., continued momentum in Asia’s emerging markets, and more government privatizations in Europe would help spur increased IPO activity next year, fluctuations in the broader equity markets may mean that companies will have to move quickly to complete sales, said Ernst & Young’s Pinelli.

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