ON A DROUGHT IN IPOs
LONG GAPS
This seemingly prosaic item in the Wall Street Journal highlights yet another long-term problem in our economy and financial markets. The piece explains*:
"Online
college Grand Canyon Education Inc. is planning its initial public
offering later this month, in a deal that would mark the end of a
nearly four-month IPO drought in the U.S.
The deal is set to price the week of Nov. 17..."
The last IPO held in the U.S. was for Rackspace Hosting Inc., which began trading on Aug. 8; if the Grand Canyon launch goes off as planned, 15 weeks will have passed without any new stocks coming to market. Since the 1970s, the U.S. market hasn't gone longer than two consecutive months without an IPO, according to data from University of Florida Prof. Jay Ritter."
The New York Times made a note of the same trend a few weeks ago:
"In the first three quarters of 2008, only six technology and health care start-ups have gone public, the lowest volume since 1977. At this point last year, 55 had staged I.P.O.s."
Obviously, the current market environment is not very conducive to IPOs. But the current drought is notable all the same, especially since IPOs are but one source of seed-corn for our economy long-term.
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