Lagardere SCA is delaying the initial public offering of its Canal Plus France stake and Glencore International AG’s IPO plans may be threatened as Japan’s biggest earthquake on record prompts a global stock selloff and cools investor demand for new shares.
Lagardere, France’s largest publisher, said yesterday it’s delaying the initial share sale of Canal Plus because of market volatility following the quake. Glencore, the commodities trader that has been studying a $10 billion IPO, lost $3.4 billion in listed mining-company investments in the past month. Some investors said that may be a setback for a sale.
Toyko stocks posted their worst two-day drop since 1987 this week, and the Standard & Poor’s 500 Index hit the lowest level since December after the disaster in Japan, which followed weeks of unrest spreading across the Middle East from Egypt to Libya, Syria and Bahrain. That may jeopardize a global recovery in IPOs that started to take hold in 2010 after the worst two years for new stock sales since 2003.
“I don’t think anyone’s in a particular hurry to get their deal out right now,” said Timothy Cunningham, a manager at Santa Fe, New Mexico-based Thornburg Investment Management, which oversees about $78 billion. “Developments in the Middle East and Japan have created uncertainty, and nobody likes uncertainty.”
Last year, Asia accounted for 7 of the 10 biggest IPOs and raised more than any region since Bloomberg began tracking the data in 1999. Asian companies raised $115 billion in 2010, compared with $91 billion for the rest of the world, according to data compiled by Bloomberg.
The volume of U.S. IPOs this year has more than tripled to $13.4 billion from the year-earlier period, while the amount of initial public offerings in Western Europe has more than doubled, Bloomberg data show.
The effects of Japan and the Middle East will probably be temporary, and the global economic recovery may still help IPO fundraising this year match 2010, said Nick Einhorn, an analyst at Renaissance Capital LLC, a Greenwich, Connecticut-based IPO research and investment firm.
“There might be companies who just decide to wait a bit and see what develops,” Einhorn said in a phone interview. “It would take a lot more than a few rocky weeks to get companies to a point where this market is too volatile or down too much to want to pursue an IPO.”
Apollo Global Management LLC postponed releasing the terms of a share sale March 15 after the market turmoil, according to two people with knowledge of the matter. Market conditions will determine when the New York-based private equity firm will schedule its roadshow to market the sale, the people said.
ISS A/S, the world’s largest cleaning-service provider owned by Goldman Sachs Capital Partners and EQT Partners AB, cut the top end of its IPO price range by about 19 percent yesterday. ISS has received orders for all stock on offer in its IPO, said two people familiar with the transaction.
While some IPOs have been pulled or reduced, Topaz Energy & Marine Plc, a Dubai-based oil and gas contracting company, started its London IPO yesterday seeking to raise about $500 million.
Glencore, the Baar, Switzerland-based company, told banks on Feb. 28 and March 1 it was studying a $10 billion sale in London and Hong Kong, two people with knowledge of the talks said at the time.
Lagardere, based in Paris, may raise more than 1.35 billion euros ($1.87 billion) from the Canal Plus France IPO, people with knowledge of the matter said in February.
The S&P 500 reached its 2011 peak on Feb. 18 before the biggest daily decline in more than six months as government violence against protesters escalated in Libya, the holder of Africa’s largest oil reserves. Crude rose to a 2 1/2-year high on the unrest.
Greenwich Kahala Aviation Ltd., the Dublin-based leaser of commercial airplanes, scrapped its plans this month for a $180 million U.S. IPO because of falling stocks and rising oil prices, Chief Executive Officer Bradley Smith said in a telephone interview this week.
“There was concern that the stock might trade off immediately following the IPO,” Smith said. “You really need the psychology of the market to be bullish, not bearish.”
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