AEI calls off IPO after price expectations fell

By DEBORAH JIAN LEE

posted: 26 DAYS 3 HOURS AGO

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NEW YORK -Energy company AEI canceled its initial public offering after reducing its size and price range, delivering a blow to the U.S. IPO market.

The company called off the deal on Thursday after the markets closed, citing "market conditions." AEI is the first company in 2009 to withdraw its IPO just before it priced.

AEI, a former Enron entity with energy-infrastructure operations in 19 developing countries, had expected shares to price between $14 and $16 per share. The company was offering 16.7 million shares. Its largest shareholder, Ashmore Funds, planned to sell 33.3 million.

Thursday, AEI lowered its expected price range to $12 to $13 per share. It raised its offering to 20 million shares, while Ashmore Funds cut its offering to just 1 million shares.

AEI, based in the Cayman Islands, carries a lot of baggage, including political, currency and credit risk, said Francis Gaskins, president of IPOdesktop. The company's income statement especially seemed to drive away investor interest, he said.

For the first six months of the year, the company's net income jumped 58 percent, driven by lower natural gas prices. But revenue for the period fell 20 percent to $3.7 billion, mostly hurt by currency devaluations in some countries.

"These are issues beyond their control - they can't control their income statement," Gaskins said. These concerns, along with a high-priced offering, turned investors away.

John Fitzgibbon, founder of IPO Scoop, said the IPO market is fragile right now, leaving investors wary of touching a company like AEI, which is loaded with uncertainties.

"Today's IPO market is rising from its ashes," Fitzgibbon said.

Investors are hungry for stability and transparency, which is why Vitamin Shoppe Inc. was able to raise more than it had expected in its initial public offering on Wednesday, he said. The retailer of fish oil, sports nutrition products and vitamins priced 9.1 million shares at $17 each, above the expected range of $14 to $16.

In its offering, Vitamin Shoppe presented a company with "plain numbers," which entailed a good growth record, profitability, and not that much stock, Fitzgibbon said.

A representative for AEI did not immediately return calls for comment.

2009-10-30 13:56:30