Asian Turmoil Chills Ipo Market Total For Last Month Was Only About Half The Number In January 1997

The financial crisis in Asia is starting to hit the new issues market in the United States after two record-breaking years of initial public offerings.

In the first month of this year, there were just 19 IPOs, down from 37 in January of last year, according to the IPO Monitor.

“If you are selling products like semiconductor manufacturing equipment to the part of the world with economic problems, an IPO doesn’t make a lot of sense,” said Richard Shaffer, founder of Technologic Partners in New York.

One of the companies affected by the cooler investment climate is Insync Systems of Milpitas, which announced last week that it shelved its IPO plans.

Insync chief executive Stanley Leopard said, “We believe there will be more favorable opportunities for an IPO in the future when semiconductor equipment stocks are valued at higher levels.”

Insync filed plans to raise as much as $39 million in a public offering last October 1.

This is not the first time that Insync was out of sync. In November 1995, the company canceled IPO plans after orders ebbed.

“There is an Asian effect,” said Kathleen Shelton Smith, portfolio manager of Renaissance Capital’s IPO Plus Aftermarket Fund, a new mutual fund that specializes in new issues. “IPOs are not starting as well as last year.”

Several other companies also have pulled their offerings in the past month.

Hawk Corp., a Cleveland maker of friction products used in brakes and clutches, and King Pharmaceuticals of Bristol, Tenn., postponed their IPOs in the past two weeks because of “unfavorable market conditions.”

Smith reports that Pentegra Dental Group of Phoenix, Quantum Epitaxial Designs of Bethlehem, Pa., and Yanzhou Coal Mining Co. of China also recently called off offerings.

The outlook for IPOs, however, is far from bleak. Last week, Sunnyvale-based Artisan Components sold 2.9 million shares at $10 and they closed their first day of trading up nearly 80 percent at $17.94. The company sells semiconductor design components.

Mountain View, Calif.’s VeriSign, which makes products to ensure secure online commerce, went public Jan. 30 at $14. Last Monday, the shares jumped $2 to $33, making it the top-performing IPO so far this year.

“The valid companies are getting plenty of interest,” said Smith. “There is plenty of money on the sidelines and there are about 150 companies that have registered to go public in the next couple of months. That is about the same as last year’s pace.”