Strong IPO by iPayment Can’t Overcome the Gloom of May –

The IPO gloom continued in May, with one small ray of light: Venture-backed iPayment Inc. went public, selling 4.5 million shares for $80 million. The venture winners were First Avenue Partners, Harbinger Venture Management, Randolph Street Partners and Summit Partners (see IPO profile, page 57 for more details).

Overall, volume was off considerably from the same period a year ago. Six venture-backed companies went public in May of 2002, raising a total of $475.8 million, or an average of $79.3 million each. May 2002 was an even better month if you factor in the public offerings of Regal Entertainment Group, a buyout-backed company that raised $309.3 million, and AU Optronics, a Taiwanese venture-backed company that raised $500 million.

This year’s picture looks even worse as a whole. Just two venture-backed companies have been able to make it out, in contrast to 12 during the same period a year ago. The market is so bad that called it quits on June 6.

Venture capitalists can hold out some hope that the rest of the year may get better, since the overall rise in the public markets has pulled up the prices of many venture-backed issues. Seven of the 12 VC-backed companies that went public between June 2002 and May 2003 were trading above their offering prices. Better yet, the two companies that made it out this year have been warmly received: Accredited Home Lenders has more than doubled in price and iPayment is up 44%. That bodes well for other VC-backed offerings with strong fundamentals.