GM is eager to sell stock to the public and shed the derogatory "Government Motors" label. Speaking before the Center of Automotive Research Management Briefing Seminars in Traverse City, GM Chairman and CEO Ed Whitacre said, "We're tired of being called Government Motors." Rumors now abound that GM is so anxious to be independent that it is considering selling the entire government stake in the largest U.S. initial public offering ever before the November 2 election. Not so fast.

Global market turbulence and rotten economic news put the IPO market to the test in the second quarter. Most investors would expect the global IPO market to have been impacted by the sell-off in global equity indexes. However, the IPO clearing mechanism continued to function, allowing underwriters to churn out new issues at a respectable pace.

With 100 deals and $45 billion in proceeds raised, the 1Q10 was the second best quarter for global IPO issuance since the end of 2007. More importantly, signals of increasing risk appetite suggest that the market may be at an inflection point. We believe that the composition of the IPO market is undergoing an important shift that has implications for both future issuance and the global economic outlook. Continuing a trend from late 2009, mature companies in cyclical industries dominated early first quarter deal flow, and investor sensitivity to valuations caused performance to suffer. However, with the number of global tech deals doubling from the 4Q09 and US venture-backed companies beginning to see daylight, we could be witnessing the revival of the IPO market?s traditional growth sectors.

Sensing vulnerability among companies needing to raise cash in the public market, IPO market vigilantes began pushing back on new issue valuations in late 2009. An unusually-high 69% of year-to-date offerings have priced below the expected range, well above the 28% average for the 2001-2009 period, as stingy investors and renewed economic uncertainties have backed issuers into a corner. The average deal is getting done at a sizeable -16% haircut to the proposed midpoint (the post-tech-bubble average is -3%) but these discounted valuations have not yet translated into higher near-term returns. While the indiscriminate pricing pressure has impacted the majority of recent IPOs, our research shows that companies with strong fundamentals are still outperforming in the aftermarket. Additionally, our data from the last two decades demonstrate that broader IPO market performance can improve rapidly and significantly following periods of harsh valuation corrections, as underwriters react to buyers? pricing demands.

The FTSE Renaissance IPO Composite Index, along with the broader equity indices, generated negative returns in the first month of 2010 in light of the ongoing uncertainty of an economic recovery. The Index was down -4.5% for the month of January.

Please read our full Index Review.

Renaissance Capital's Paul Bard participated in a live web discussion hosted by Seeking Alpha on January 11, 2010. The discussion was titled "IPOs in 2010: The Great Thaw?", and covered a wide-range of topics including private equity and venture capital backed IPOs, a continued interest in Chinese companies, and the possibility of a Facebook IPO in 2010. A full transcript is available.

It is a testament to the resilience of global economies, entrepreneurship, and financial animal spirits that the global IPO market rebounded as quickly and strongly as it did in 2009 after the devastations of worldwide stock markets and banking systems in 2008. 2009 will be seen as a transition year between crisis and recovery to normalcy. While aggregate global proceeds are still well below normal levels, issuance accelerated through the year, creating a solid foundation for 2010.

The FTSE Renaissance IPO Composite Index was selected as a finalist for the William F. Sharpe "Most Innovative Index" Award at the 2009 Super Bowl of Indexing conference in Phoenix, Arizona. William Smith, President and CEO of Renaissance Capital, commented: "It is a great honor for us and our index partner FTSE Group to be recognized for innovation by the renowned academic voting committee". The FTSE Renaissance IPO Composite Index is the first comprehensive benchmark index to track the performance and activity of the IPO market. The Index includes all institutionally-investable IPOs, capturing over 95% of the U.S. IPO market. IPOs are included at the end of their first trading day and exit the Index after two years, when they become seasoned equities. The Index is currently comprised of 86 IPOs, including recent additions ancestry.com, Dollar General, Fortinet, Hyatt Hotels and rue21, among others. So far this year, the FTSE Renaissance IPO Composite is up 47.4% versus the S&P 500, which has generated a return of 22.0%.