Contact: Brenon Daly
At the risk of oversimplifying the market for new offerings this week, we might nonetheless formulate an equation like this: AAA to AA+ = RW. Spelled out, that means: The historic downgrade in the credit worthiness of the US contributed to some of the bloodiest days Wall Street has seen, which in turn contributed to many IPO candidates deciding to scrap their planned offering. (Companies formally do this by filing what’s known as an RW form, for ‘Registration Withdrawal,’ with the SEC.)
Amid the choppy trading this week, both WageWorks and Trustwave shelved their proposed IPOs, which were originally expected to raise, collectively, about $200m for the companies. Instead, they’ll be heading home empty-handed from their aborted push to the public market. (The sole tech firm that made it to market, online backup vendor Carbonite, did so only after trimming its offering, which meant raising one-third less money than planned.)
While WageWorks and Trustwave – both of which have been active acquirers, even as private companies – will undoubtedly miss that windfall from their planned IPOs, the decision to scrap the offerings this week was inevitable. For a bit of context, consider this: When the two companies originally filed their paperwork to go public back in April, the Nasdaq was roughly 10% higher and the overall market volatility (as measured by the CBOE Volatility Index, or VIX) was less than half the level it is now.