Insatiable Mutual Funds Keep IPO Party Going, if at a More Sober Clip

The IPO party is not over. But with the tech-stock market in bear territory, the celebration has downshifted from a wild frat party to a more sophisticated gathering.

What's noteworthy about the state of the market for IPOs is that any are occurring at all. In a market characterized by sagging tech stocks, new offerings typically grind to a halt, as they did most recently in the summer of 1998. Yet shares of communications software maker Nuance (NUAN Quote) nearly doubled from the offering price in their debut Thursday. Shares of Corillian(CORI Quote), a software company focused on the financial services industry, also gained, closing up more than 50% above their offering price.

"The reason the IPO market is not dead is that we're not seeing any redemptions" from mutual funds, says John Marren, an investment banker in Morgan Stanley Dean Witter's Menlo Park, Calif., office. In other words, with so much money in the hands of institutional investors, there will be an appetite for some deals. ...