Delphi IPO may not happen due to industry slowdown

Article by Christian Andrei, on June 6, 2011

Current economic indicators from May suggest that the auto industry is slowing down, making experts doubt whether Delphi Automotive LLP’s initial public offering is happening soon.

Delphi, which was previously a General Motors unit, had registered last month for an IPO to attempt to raise $1 billion. On May 25, Delphi submitted its registration statement to the U.S. Securities and Exchange Commission.

Delphi didn’t cite a specific timetable for this IPO. David Sowerby, the portfolio manager for Loomis, Sayles & Co., said that the market may have recovered but due to the economic hurdles right now, it would be more challenging to raise major capital.

He explained that while there had been “some headwinds” for the car industry, the macro environment had been faced with more challenges in the last two weeks. In May 2011, auto sales in the U.S. failed to meet analyst projections, adjusting down the seasonally adjusted rate to 11.8 million vehicles from 13.1 million in April.

For May, the actual sales fell by 4% to 1.06 million vehicles. According to the Institute for Supply Management, the manufacturing index in May indicated that U.S. manufacturing is increasing at a “much slower rate” than in April.

The index fell to 53.5 in May from 60.4 in April. When the reading is higher than 50, it indicates growth. Last Friday, the U.S. Department of Labor posted a major slowdown in hiring last May with just 54,000 jobs created. Analysts had predicted that there will be about 165,000 new jobs.

Topics: delphi, ipo

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