Fifth Street Asset Management Inc., the fund manager that oversees almost $6 billion in assets, scrapped its U.S. initial public offering, blaming stock market volatility.
The company, which had sought to raise as much as $208 million in an IPO scheduled to price Oct. 21, will withdraw its registration statement filed with the Securities and Exchange Commission, according to a statement Oct. 22.
Demand for stocks without a track record often withers during broad market declines and as shares of a company’s publicly traded peers drop. While the Standard & Poor’s 500 Index has rebounded recently, it fell as much as 3 percent in the days after Fifth Street set the terms for its IPO on Oct. 9 and started marketing the sale to investors. Ares Management LP, an asset manager that went public in May, fell 1.3 percent in the same period.
Some companies that have pushed forward with IPOs have had to cut the size of their sales to close the deals. Great Western Bancorp Inc. priced the shares in its IPO below the marketed range on Oct. 14. The shares are up about 5 percent from the $18 IPO price. Biotechnology company Proteon Therapeutics Inc. priced its IPO Oct. 21 at $10 each after seeking as much as $14 a share. The stock climbed 2.4 percent to $10.24 at 1:09 p.m. in New York.
Leonard Tannenbaum, 43, founded Fifth Street in 1998. The Greenwich, Connecticut-based company provides financing to companies with annual revenue of $25 million to $500 million. Fifth Street has been on a roll recently, which is why Mergers & Acquisitions named it the 2013 winner of the M&A Mid-Market Award for Lender of the Year. In 2013, the lender doubled deal value, took a second business development company (BDC) public, bought another lender, started a venture lending operation and an aircraft leasing operation, and added new offices.
Tannenbaum, who did not plan to sell shares in the IPO, would have held a stake valued at more than $1 billion if the shares had priced at the top end of the marketed range, making him one of the world’s youngest billionaires. Tannenbaum holds an undergraduate degree in economics and a masters in finance from the Wharton School at the University of Pennsylvania. Before founding Fifth Street, he served as an analyst at an analyst at Merrill Lynch.
In recent years, Tannenbaum has dabbled in politics, founding in 2012 a political action committee (PAC) called "Keeping America Competitive," which he describes as “pro-business and bi-partisan.” Tannenbaum, whose mother was born in Cuba, also hopes to bring together Hispanics, who, he says, “haven't had the right voice in government.” For more on the PAC, watch Mergers & Acquisitions’ video with Tannenbaum.