Blank returns

4 March 2008 By Lauren Silva

Issuers say investors are snapping up shares of blank cheque IPOs even as they shun regular IPOs because there is little downside. But that s only true if the manager doesn t buy anything. If he does and he has every incentive to do so investors can easily lose out.

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Blank cheque companies, or special purpose acquisition companies, sold more than $12bnworth of shares in 2007 nearly four times more than in the year before. So far this year, the volume of Spac issues has tripled compared to last year, Dealogic says. This week alone, Market Street Acquisition, Oasis Group and Sidhu Special Purpose Capital Corp filed for IPOs to raise a total of $800m.

IPOs of traditional operating companies, however, are being postponed or cancelled. Software security firm Upek yesterday canceled its proposed $86m offering because of difficult market conditions. With the exception of Visa's highly anticipated flotation next month, the public offering market has slowed dramatically this year. Companies have shelved IPOs totaling $21.4bn so far in 2008, almost double the value of new equity issuance.

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