Orange County Register

The IPO market in 2009 will be slow, but the few issues that come to market may provide significant returns, says Renaissance Capital, which tracks the IPO market.

“With IPO volume low, many investors will be tempted to ignore the IPO market altogether as we move into 2009,” writes Renaissance. “This may be a mistake. Historical precedent suggests that IPOs in periods of low issuance can generate very strong returns as companies are forced to become more realistic with their proposed valuations in order to successfully raise capital,thereby creating opportunities for investors.”

Here are the trends Renaissance sees for ‘09:

• IPO activity will be low in 2009, but new issues could produce healthy returns
• High-growth stories are less likely to be successful as investors lean toward defensive sectors
• Private equity may be a source of several large deals toward the end of the year
• Although many companies have withdrawn IPO filings, there are still 100+ U.S. operating companies in the pipeline
• As in 2008, there will likely be several privatizations going public on foreign markets
• More defensive areas such as education, health services, energy and defense will supply the majority of 2009 IPOs.
• Another significant source of upcoming IPOs may be the private equity industry, as many portfolio companies need to refinance debt in the near future; with the credit markets frozen, equity financing may be the only viable option.

Read the full report HERE.

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