[NEW YORK] Zero: That's how many initial public offerings have started trading on US exchanges so far in 2016. At this rate, January is on track for the slowest month for IPOs since December 2008, when no companies filed after the bankruptcy of Lehman Brothers Inc.
Compare that to January 2015, when 19 companies listed on American exchanges. The busiest month in the past eight years was July 2014, when 54 companies started trading.
The culprit? Whipsawing equity markets have made it challenging to price public offerings. Volatility has intensified, driven by the slowing economy in China, a depressed commodities industry, turmoil in the high-yield bond market and lingering uncertainty around how higher interest rates will affect the financial system. The Standard & Poor's 500 Index has plunged 6.7 per cent to start the year, while the Chicago Board Options Exchange Volatility Index, a gauge of investor nervousness, is back above the troubling level of 20.
Elevate Credit, the online consumer loans company seeking to raise as much as US$80 million in an IPO this week, delayed the offering, citing the "volatile" market. Only three companies are planning to price their offerings in the remainder of this month. Shimmick Construction Co is aiming for an offering of as much as US$81.25 million, Ameriquest Inc for as much as US$80 million and Advanced Inhalation Therapies AIT Ltd. for as much as US$10.1 million.
An IPO market recovery may take a while, said Tom Farley, president of NYSE Group Inc. "They will, by and large, IPO eventually. The question is when," Farley said in a Bloomberg TV interview at the World Economic Forum in Davos, Switzerland. "It is likely a matter of months, not days or weeks."