IPO Volume Hits Lowest Level Since 1996 –

Despite a flurry of filings, pricings and IPO offerings during December, the year’s total number of initial public offerings, approaching 60 at press time, is the lowest it has been since 1996. Inside that dark cloud there is an even darker lining: The single largest group of offerings, measured from September, came from the life sciences. Six of these eight IPOs are among the worst performing offerings of the year. In spite of that decidedly disappointing news, three life sciences companies were trying to push through the IPO window before the year closed: Acorda Therapeutics, Immunicom, and Corgentech. Two other life sciences offerings, Tercica (led by Morgan Stanley) and TolerRx (led by J.P. Morgan) were postponed in late November.

There were several bright spots for IPO watchers in the areas of finance, health care, enterprise software, semiconductors, Internet-related companies and China. Companies from these sectors were among the best performers of the year: Accredited Home Lenders (finance), VistaCare (health care) and FormFactor (semiconductors). In December, financial services companies Aspen Insurance, American Equity, Nelnet and Sunset Financial Resources made (or had filed to make) modestly successful offerings, while China Life (combining both Chinese public offerings and finance sectors) was poised to become the year’s largest IPO offering.

A cluster of activity in enterprise software companies has VCs salivating. Kintera and Motive and were pushing to complete IPOs before the calendar year closed, following in the footsteps of Callidus Software and Open Solutions. The latter two were among the year’s best performers. This space bears watching closely. If Kintera and Motive succeed, a host of venture-backed enterprise software firms will register for public offerings in the first quarter of next year.

Finally, two Internet offerings, Ctrip.com (travel in China) and Orbitz, successfully completed IPOs in the second and third week of December. Ctrip was trading 89% above its initial offering price on its first day’s trading, making it the best performing IPO in nearly two years, according to Renaissance Capital. The strong interest in the issue has sparked widespread hopes for Internet offerings in the first quarter of 2004.

– Jerry Borrell, Senior Editor