* Six of 14 IPOs in past month now under offer price
* Investors still risk averse-analyst (Repeating item that initially moved on Friday)
By Phil Wahba
NEW YORK, Oct 18 The much touted return of the U.S. initial public offerings market is showing signs of fatigue, as nearly half of new offerings in the past four weeks have fallen below their IPO prices.
Many investors remain risk-averse and IPOs by definition are more of a gamble than other stocks, analysts said.
"Investors are skittish and will pull the trigger immediately if they can't make money on a stock," said Kathy Smith, a principal at Connecticut-based investment firm Renaissance Capital, which specializes in IPOs.
Companies and their advisers have struggled to gauge investors' risk appetite in what are still the early days of the market's recovery, leading several deals to be overpriced, then fall in their debuts.
"The underwriters are having trouble figuring out how to price these (IPOs) to stay above their IPO price," Smith said.
Since mid-September, 14 companies -- excluding real estate investment trusts -- have listed on a U.S. exchange.
That is a marked reversal of fortune showing a pick-up in the IPO market. On the strength of those deals, IPOs this year have now surpassed 2008's total.
But of those 14, six have fallen below their offer prices, according to Thomson Reuters data, with analysts faulting aggressive pricing by issuers or, in certain cases, their private equity backers.
In addition, although historically U.S. IPO prices have risen 10 to 12 percent in the first day, only four of these 14 rose at least 10 percent in their debuts.
The disappointments of the last four weeks contrast with the first IPOs of the year. Of the 16 IPOs in 2009 prior to September, 13 are still at or above their IPO price, due to more careful pricing.
That lesson is already informing how companies are positioning their IPOs.
China Real Estate Information Corp CRIC.O debuted strongly on Friday on Nasdaq after pricing its IPO near the bottom of the estimated range, a strategy the Shanghai-based company said was designed to get a strong first-day jump.
"We wanted to instill confidence in our investors and that's why we priced the IPO at a discount," China Real Estate's Chief Financial Officer Bin Laurence told Reuters.
Shares in the company, which operates a database with information on about 38,200 developments or buildings in China, finished up 18.3 percent in their debut.
Recent hit IPOs include insurance risk specialist Verisk Analytics (VRSK.O), up 28 percent, and lithium-ion battery maker A123 Systems Inc AONE.O, up 71 percent.
And the pace of new filings remains robust. The calendar is full of high profile IPOs in coming weeks, include Dole Foods and Vitamin Shoppe.
But there have been serious misfires, notably Chinese videogames maker Shanda Games Ltd GAME.O, down 18 percent from its IPO price, and private equity-backed RailAmerica RA.N, down 6 percent.
In particular, investors are punishing debt-laden companies, Smith said. That may bode ill for a slew of private equity-backed firms seeking to go public, such as Minnesota medical device maker AGA Medical Holdings, set to price this week, and Vitamin Shoppe, which will go public in two weeks.
"Investors are looking for unlevered growth," Smith said. The problem is that private equity backers "want to get top dollar."
NEXT WEEK'S IPOS
Dole Food Co Inc DOLE.N, the world's largest producer of fresh fruits and vegetables, will price its $500 million initial public offering on Thursday and begin trading on the New York Stock Exchange the following day.
Investor David Murdock took Dole private in 2003 in a $2.5 billion deal, and will still own 59 percent of Dole's shares after the IPO, according to a prospectus.
Dole sales fell 11.1 percent to $3.3 billion in the first half of 2009, while profit dropped 18.3 percent. Dole expects net proceeds from the IPO of $468 million, almost all of which will be used to pay down debts.
AGA Medical Holdings Inc AGAM.O, whose devices treat structural heart defects and vascular diseases, is expected to complete its $275 million offering on Tuesday and list on Nasdaq under the symbol "AGAM."
AGA sales in the first half of 2009 came to $94.4 million, with a loss of $4.2 million. It plans to use net proceeds to pay down debt and dividends.
The company's largest shareholder is private equity firm Welsh, Carson, Anderson & Stowe, which will still own 46.7 percent of the company after the IPO.
The last IPO launched by that private equity firm, of hospital operator Select Medical Holdings Corp (SEM.N), priced below its estimate range and is down 2.3 percent from its IPO price. (Editing by Gary Hill)
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