PricewaterhouseCoopers reports that the number of initial public offerings in the United States has now declined for three straight quarters, with just 12 deals raising US$1.9 billion in the third quarter.

For the first nine months of 2008, there were 54 IPOs that raised US$31.2 billion, a significant drop from the 195 offerings that generated US$44.7 billion for the same period in 2007. When the US$17.8 billion VISA IPO is excluded from the 2008 results, IPO value for the first nine months was just US$13.3 billion, it noted.

The third quarter deal flow was the slowest quarter since the second quarter of 2003, when five IPOs raised US$1.6 billion. Comparing the third quarter performance to other third quarter results, IPO activity for the third quarter of 2008 was the most sluggish since 2002, PwC said.

“The crisis in the credit markets and prolonged volatility in the equity markets are deterring companies from pursuing IPOs. Issuers will continue to defer equity offerings until some stability is restored and investors regain confidence in the U.S. financial system,” said Scott Gehsmann, a capital markets partner in PricewaterhouseCoopers’ Transaction Services Group.

It also reported that as of Oct. 7, 73 planned IPOs were either postponed or withdrawn compared to 16 for the same period in 2007. Additionally, non-U.S. issuers are also shying away from the U.S. market, PwC said, as there were only five IPOs by non-U.S. issuers in the third quarter compared to 11 in the same period in 2007. For the first nine months of 2008, IPO volume and proceeds raised by non-U.S. issuers decreased by 54% and 83%, respectively, to 16 offerings and US$2.1 billion. China continued to be the domicile of most non-U.S. issuers with seven of the 16 offerings.

Additionally, the special purpose acquisition company IPOs that gained popularity in 2007, nearly dried up in 2008, the firm observed. There were just two SPAC offerings in the third quarter of 2008, bringing the nine month total to 11, generating US$3.4 billion. For the same period in 2007, there were 27 SPAC IPOs raising US$3.9 billion.

“While some backlog of deals exists, the prolonged credit turmoil and the impact on the equity markets are discouraging good companies with sound business models from accessing the U.S. capital markets. Investors, uncertain where the current market may lead, are holding onto cash,” said Gehsmann. “As IPO volume continues on a downward spiral, we anticipate that the number of IPOs in 2008 will be lowest in the last five years.

IE