The hunger for public cash is still keeping the initial public offering pipeline full despite volatile market conditions, according to data on new registrations for April and May.
Considering the number of companies that have put off or withdrawn their public offerings during 2000 due to market conditions, the number of companies filing to go public might be expected to show some decline.
But during April and May, a total of 164 companies filed to go public; that's an increase over the 143 companies that filed to go public during the same two months of 1999, according to Thompson Financial Securities Data. In June, there's more evidence that market volatility hasn't scared startups from going public. In June, 15 companies had registered to take the public plunge as of June 8 -- over just 6 business days.
"That's surprising," said Kenan Pollack, an analyst at IPO Central. He added that there may be some expectations for delay built in to those companies' decision to file.
On average, it takes about 10 to 12 weeks from the time a company registers to go public to the time it prices its deal.
Daniel Heaney, treasurer of SupplierMarket.com (Proposed ticker: SMKT), a Burlington, MA B2B company, said the company filed for an IPO at the height of the B2B run in early March. Then B2B stocks fell out of favor.
"We may be in registration for awhile, but not by choice," said Heaney, who attended a recent B2B investment conference in New York.
Heaney said he was surprised that registrations remained strong despite the market volatility. "They must think it will clear up," he said.
For startups, the only real problem with registering and waiting for market conditions to improve is the quiet period. Companies can't tout their prospects properly when they're in the wings for an IPO.
SupplierMarket has enough cash to wait for an IPO up-tick and last updated its registration in May. Indeed, SupplierMarket is the exception rather than the rule when it comes to cash.
"There are a lot of companies that have cash requirements," said Richard Peterson, an analyst for Thompson Financial Securities Data on why the number of companies registering to go public hasn't declined.
Of the 200 companies that have registered since January, about two-thirds are technology issues, and about half of those "are concept companies as opposed to those with products and services," Peterson said.
But IPO registrations are beginning to show signs of tapering off on a weekly basis, Peterson noted. He said there has been a gradual decline over the past 7 weeks.
On a monthly basis, new registrations peaked in March, with 150 companies signing up for an IPO. That number declined to 118 in April, and 95 in May.
An increase in the number of companies that have actually completed IPOs in the last 3 months is evidence the rush to market is far from tapering off -- since the Nasdaq peaked March 10, 121 companies have completed public offerings.
That rush of companies, which includes Sequoia Software (Nasdaq: SQSW), ONI Systems (Nasdaq: ONIS) and New Focus (Nasdaq: NUFO), topped the more than the 93 that went public between January 1 and March 9 when the market was roaring ahead. IPO fever still going strong.
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