IPOs Melt Away

The first indication of trouble in the IPO market occurred on June 12, when investors gave a thumbs-down to French banking giant Societe Generale's spinoff of its Cowen(COWN) investment-banking arm. Societe Generale was forced to price the shares for the offering at $16, well below the anticipated range of $19 to $21 a share. The lowered price meant Cowen could only raise $179.5 million from investors, less than the estimated $212 million it had had been seeking.

But the Cowen deal's woes continued on the first day of trading, when the investment bank's shares fell at the sound of the opening bell. At one point, the stock was down as much as 4.7%. On Wednesday, shares of Cowen were still trading beneath the IPO price, with the stock closing at $15.16 a share.

"It was a large rock thrown into the pond, and ripples were felt throughout the IPO market," says Menlow.

Since the Cowen debacle, 18 deals have been formally canceled or postponed, according to Thomson Financial. One of the shelved offerings is for the financial services firm Ryan Beck. BankAtlantic, which owns the small New Jersey-based firm, pulled the IPO in late July and said it would reconsider selling shares at a later date. The firm may also be for sale, sources say.

Meanwhile, some other deals, which have not been formally delayed, are struggling. Sources say that the offering from Alien Technology may be in trouble.

Investors interested in the Alien Tech IPO, which is being handled by Bear Stearns(BSC), were allocated shares last Friday, sources say. But the deal still hasn't formally priced, an unusual situation for any offering.

The dismal performance of the Cowen deal, coupled with the postponement of the Ryan Beck offering, is prompting concern about how IPOs for other financial services firms, including Evercore and Keefe, Bruyette & Woods, will fare. Many on Wall Street are keeping a close eye on Evercore, the boutique investment bank led by former deputy Treasury Secretary Roger Altman, which began meeting with investors this week to sell the deal.

People familiar with the Evercore IPO say the firm, which is looking to raise about $90.9 million, anticipates pricing the offering sometime in the next two weeks. In a recent filing, Evercore said it expects to price the shares at between $18 and $20.

Given the chilly IPO market, however, it might be worth waiting to pick up shares in the aftermarket, analysts say.

"There is not going to be an overwhelming reception to any of these brokerage firms," IPOfinancial.com's Menlow says.

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