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Ways around a difficult issue

Wary investors and a growing equity issuance backlog have spelt disappointment for many of the issuers that have made it to market. IPOs have been particularly hard hit, prompting advisers and bookrunners to devise processes that offer more reliable pricing and greater flexibility.

Wrong numbers: Virgin Mobile's partial flotation
in London last month raised only £125 million
of a hoped for £279 million

There was a time when to call a recent IPO a success when its stock was up 2.3% on the launch price would have been a joke.

In today's market, though, Pages Jaunes' e1.8 billion deal spin-off from France Télécom is one of the better performing European IPOs of the year in an environment where 37% are currently trading below offer price. It seems to be more of a second-quarter phenomenon, as data from SG corporate and investment bank shows. While IPOs in the first quarter were up on average 15.2% to date, those launched in the second quarter have averaged just 3.9%.

Part of the problem is the market. Stocks just aren't going up much these days, in any major market, and investors are wary of biting off too much. But the recent poor performance of so many new issues, coupled with the growing tendency to lower deal price ranges and sizes, and even pull some deals, has got some wondering whether there's a problem with the IPO process itself.

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