Scottish Widows gave me access to a stranger's £40,000 pension pot - plus their name, address, date of birth and NI number
Here's one savings account you SHOULD get from a High St bank: SYLVIA MORRIS on the latest Isa deals
How do we stop our troubled child gambling away their inheritance? Excluding one of our five children from our will would make them feel rejected...
I wanted to return £12,000 of wedding clothes from Matches, but then it went bust: SALLY SORTS IT
My Isa has £24,000 in shares, investment trusts and ETFs - what's the cheapest investing platform?
Bungalow wars! Downsizers are in bidding battles against young families as prices soar
The 10-minute rule that could save you from a parking fine... We go on patrol with a traffic warden (and, yes, she did enjoy handing out tickets!)
House prices hold steady in April says Halifax - but higher mortgage rates are forcing buyers to compromise on size and location
BUSINESS LIVE: Boohoo sales slump; Wetherspoon's lifts profit expectations; Workspace boss exits; Can the FTSE stay above 8,300?
Footsie soars to another record high as borrowing costs fall on fresh hopes rates will be cut this summer
Boost for City as BP vows to keep its London listing - but profits at oil giant tumble 45% to £2.2bn
Saudi Aramco to pay £100bn dividend to help fund city of the future as kingdom looks to reduce its dependence on oil
Kier Starmer and Rachel Reeves just don't have that 'vision thing', says ALEX BRUMMER
Big Four auditors fined £9m for the London Capital & Finance mini-bond crisis
We're financial experts - this is how you can use your Isa and pension to grow your wealth in the new tax year
How YOU can cash in on the stock market 'feeding frenzy': These ten UK companies are ripe for takeover bids that could see shares rise 50% or more
First Direct relaunches £175 switching deal for new customers just two weeks after pulling it
Failing to remortgage in time could cost homeowners £278 a month: New study shows a third slip onto a costly SVR
I've been told I can get my private pension at 55 because I was born in a two-year window in the 1970s: Is that right? STEVE WEBB replies
Take That's concert at Co-op Live has moved venue - can I reject my new seats 53 rows further back?
I'm dying of brain cancer at 39 but my insurance won't pay out because I had 'dizzy spells' after I applied
House prices will rise £61,500 on average in the next five years, predicts Savills - and there will no longer be a fall in 2024
My elderly father was duped into £25k debt by scam company Marks Art: TONY HETHERINGTON
Should you get insurance to spare an inheritance tax nightmare? Probate delays push families into tax trap

City focus: Floats are out of fashion

By Simon Duke for MailOnline
Updated: 04:32 EDT, 29 January 2008

View
comments

Another day another bloodbath on stock markets. Fears that a US recession will drag the global economy down are really taking hold, bringing pain to investors from New York to Shanghai.

Waving goodbye to his flotation: Tommy Hilfiger's £1.6bn IPO will have to wait until the markets have stabilised.

But shareholders are not the only ones taking a heavy pounding. The stomach churning turbulence on equity markets has forced a raft of companies, including preppy fashion house Tommy Hilfiger, to throw in the towel on planned stock market floats in recent weeks.

The appetite for new share issues has been in freefall since the start of the year.

Risk aversion is now the name of the game, and all the 'hot' money now appears to be shifting to traditional safer havens, like gold.

Get data on recent and upcoming new stock market flotations.

Data provider Dealogic says companies debuting on European stock exchanges have raised a paltry £11.5m so far this year - a staggering 94% drop from the same time last year.

And research from financial news firm Bloomberg suggests that the pace of cancellations is now running at a 10-year high.

With the FTSE 100 down another 80.1p at 5788.9 yesterday, only the brave, or desperate, would risk taking the plunge right now.

Apax Partners, the private equity owner of Tommy Hilfiger, admitted as much when it warned that the fashion label's £1bn flotation would have to wait until the market 'stabilised'.

And the dizzying turbulence forced Denmark's Dong Energy to cancel its £1.6bn float earlier this month.

It's not just the blockbuster deals that are getting pulled, though. Scottish television company SMG scrapped a spin-off of Virgin Radio in the Autumn due to jittery markets.

With investors demanding hefty discounts for buying in to floats, the radio station was swiftly joined by restaurant chains Wagamama and Gaucho Grill.

And things must be bad when a company like Australia's Oceanwave, a powerhouse in the sexy wave power arena, prefers to keep borrowing from the bank rather than tap the equity markets.

The truth is that the European market for new share issues has been drying up ever since the credit crisis erupted in August.

The number of European floats tumbled 30% in the fourth quarter alone, according to Dealogic.

For investment banks, there has been a sharp drop in fees from European debuts, although they could at least console that the rewards from India and China remained juicy.

But even that source of 'low hanging fruit' is poised to disappear.

Asian stock markets yesterday suffered their steepest falls since September 11, and three high profile floats have been cancelled, including Hong Kong department store owner Maoye International.

'The market has gone cold and we didn't think we would get a proper valuation,' said Mikio Yamamoto of Mid Urban, another Asian retailer to pull its IPO.

City coverage and share tips

This is Money carries breaking City news throughout the day. Bookmark Companies & Markets and try these markets links...

The realisation is growing that the Asian economy could suffer a very sharp slowdown if the approaching American recession is severe. If regional powerhouse Japan is already in recession, as many fear, it's difficult to see how India and China can keep booming.

Debuting on a equity market is much more than just allowing private equity investors to cash in or pandering to the chief executives' ego. Stock exchanges have traditionally been a cheap and liquid source of capital for firms looking to grow their businesses.

If the appetite for floats continue to dwindle away, growth companies could be forced into tapping debt markets for investment cash.

The trouble is that corporate bond markets appear to be closed off for all but the most well established companies. As Marek Gumienny, boss of private equity group Candover, yesterday warned: 'The wheels have well and truly come off the debt market.'

The growing funding crisis is a very ominous sign for the global economy. If new growth companies such as Google don't emerge there's a danger that a US-led slowdown may turn into a full-blown global economic recession.

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.