After a whirlwind week that was the busiest for initial public offerings in four months, US IPOs will come to a virtual standstill early next week to await the outcome of the US presidential elections.
This past week, 12 deals raised $2.8 billion, according to data provider Dealogic, marking the highest number of IPOs priced in a week since June. Among the week's highlights, Shopping.com soared 60 percent in its debut, while DreamWorks Animation SKG Inc gained 38 percent after its shares priced well above their targeted range.
But companies preparing to hold IPOs know better than to come to market while investors will be distracted by Tuesday's upcoming election.
According to a Reuters/Zogby poll released on Friday, Democratic Sen. John Kerry moved into a dead heat with President George W. Bush. The deadlock sets up a tight race.
"The primary concern with respect to the election isn't so much is it Bush or is it Kerry, but will there be a final determination on Election Day?" said Thomas Fox Jr., co-head of US equity capital markets at UBS Investment Bank. "People right now recognise this election is going to come down to the wire."
In the month after the 2000 presidential election left no clear winner, the Dow Jones industrial average declined about 500 points.
Bankers are hoping there will be a definitive winner this election to avoiding stalling the momentum in the IPO market.
"There's very good sentiment in the market with respect to initial public offerings at this time," Fox said.
In the fourth quarter, the average first-day gain for IPOs has been almost 11 percent, according to Dealogic.
This quarter's IPOs are performing well in their market debuts because many were priced in the aftermath of a gruelling August, when numerous companies slashed their offering prices to avoid having to postpone their deals.
"They're obviously underpriced a little bit," said Francis Gaskins, who tracks IPOs for IPOdesktop.com, of the latest deals to come to market. "It's very healthy to have this for the investor."
While the IPO market is once again finding its feet after a difficult August, the pipeline is a little light, Fox said.
"There are certain categories of companies that historically have not been active in the fourth quarter," he said, citing businesses like retailers that are heavily dependent on holiday sales.
Early in the fourth quarter, 18 companies have filed to hold IPOs, down from 78 in the third quarter, 152 in the second quarter and 92 in the first quarter, according to Dealogic.
On the calendar for late next week is the IPO of MarketAxess Holdings Inc, which operates an electronic platform for bond trading. Last month, it cut its planned IPO to 5 million shares from 9 million and the expected price range to $8.50-$10.50 a share from $16 to $18. The company plans to trade on Nasdaq under the ticker symbol "MKTX.O".
Credit Suisse First Boston and JPMorgan are the lead underwriters. The company warns in its regulatory filing that the underwriters "have several potential conflicts of interest" because their affiliates are stockholders and broker-dealer clients of MarketAxess.
Also on the calendar for late next week is the $200 million IPO of Arlington Tankers Ltd. The Bermuda-based crude oil tanker company was founded in September 2004 and has agreed to buy six tankers. It is currently a jointly owned subsidiary of Stena AB and Concordia Maritime AB, which have already signed five-year agreements for use of the tankers.
The offering is being led by UBS Investment Bank and Jefferies & Company Inc Arlington plans to trade on the New York Stock Exchange under the ticker symbol "ATB.N" .
The Reuters/Zogby poll of 1,203 likely voters was taken Tuesday through Thursday and has a margin of error of plus or minus 2.9 percentage points.