The unprecedented failure for the travel firm came after the five-day institutional bookbuild, which ended last Wednesday, and ahead fo the public offering, which was due to begin today and run until February 28.

According to bankers in the Kingdom, the group could only achieve coverage of around 40%–50% of the offering size, even at the lowest end of the SR45–SR50 (US$12–$13.30) price range. A price range remains a rarity in Saudi and investor sensitivity is inevitably higher when a company is sold for a reasonable price, rather than the bargain of par value.

Progression to the public portion of the IPO could not go ahead as the CMA requires that the whole book is covered by institutions first. Al Tayyar had hoped to raise SAR1.2bn (US$320m) from the offering of 24m shares.

In quotes attributed to Nasser al Tayyar, chief executive of Al Tayyar Travel Group, he said that around 67% of the shares had been subscribed to by institutional investors.

He ascribed the weak bookbuild and subsequent cancellation to the fact that it had coincided with a school holiday in the Kingdom, which had meant investors didn’t have enough time to study the company’s profile.

This was dismissed by some bankers who pointed towards investors not being happy with the company itself as the primary cause. Yet one banker pointed out that the P/E ratio for the prospective pricing, at 9.5-10.5 times earnings, was a fair price and actually better than the two previous offerings this year in the Kingdom: from Herfy Food Services and Al Sorayai Trading and Industrial Group.

The lack of interest was, according to the same banker, down to issues with Al Tayyar’s business model, with a switch to booking holidays online hitting its offering.

This lack of confidence in the company, which was cited by most bankers in commenting on the cancellation, suggests there are no issues with the wider market and it will remain open for other IPOs going forward.

While bankers agreed what has happened will have an impact on investor confidence, with some believing one or two issuers might postpone their IPO plans to re-evaluate where the market currently stands, the pipeline of Saudi offerings will remain fairly intact; helped by the considerable backlog of companies which would like to IPO.

One banker believed it would be beneficial if the regulator CMA announced the next set of IPOs shortly, which would help restore confidence that the market is functioning normally and negate any negative affects this has had.

One interesting aspect of this episode is that it is a successful measure of the investor protection provided by the CMA’s IPO structure. The fact the offering didn’t reach the public stage because institutional investors, which are more sophisticated in judging the company’s prospects than the general public, deemed that the issue wasn’t satisfactory ensured that the wider public were protected.

Given that the primary role of the CMA is to protect the wider populace, bankers said that the process in place is a good one.

As for Al Tayyar, bankers are split on what this means for its plans to IPO. While some have indicated it could return in a few months time, others have said it might be at least a year before it resurfaces again. However, if it is the structure of the company which investors have reacted against, it will mean Al Tayyar will have to make fundamental changes to its business model to get them on board. Morgan Stanley Saudi Arabia had been acting as lead manager.

Some commentators rushed to the conclusion that the buyside would not touch evil sponsor-backed deals. Bankers involved in the transaction – perhaps with an eye on their sponsor-heavy pipelines – agreed among themselves to blame “market conditions”. Both conclusions were wrong.

While there is some truth in the assertion that funds pay closer attention to some details when they know sponsors are involved, the notion that they shunned Travelport simply because of this is nonsense – especially when 600 accounts met the company.

And yes, volatility has jumped on the back of a stack of unsettling news – including China reserve requirements, the Volcker rule, poor non-farm payrolls and Greek sovereign CDS. Yes, this will have caused less-committed money to pull back from the new issue market.

But writing off the IPO market is way off the mark. Just two days before Travelport’s deal collapsed, French sponsor-backed firm Medica priced an IPO at the right level, three times covered, and with a positive equity story that investors wanted to buy.

And what exactly happened between that deal and Travelport? The FTSE 100 gained each day and Greek sovereign CDS tightened – hardly grounds for blaming market conditions. After the cancellation, Blackstone completed a US IPO for Graham Packaging.

Travelport’s failure was deal-specific. Investors have little appetite for new issues that are simply to pay down debt loaded on companies by private equity without a compelling growth story. Travelport needed US$2bn to pay down debt to an acceptable level for the public market, and top orders of US$20m were never going to get there.

Private equity may well have to hang on to its less attractive assets for longer than it would like, but that doesn’t mean the IPO market is closed.

But many investors, especially in the UK and US, became increasingly concerned about macroeconomic issues such as Greece’s sovereign debt and worsening relations between China and the US. A 5% drop in the Euro Stoxx index, and a steady decline in main peer Croda, also contributed to making investors wary of looking at new stock.

Moving the price range would have had no impact according to sales teams.

It seems like little could have been done differently to yield a different result. So what does this mean for IPOs in the coming months? Macro issues concerning markets are not going to disappear and volatility is therefore likely to remain.

Is it really just a case of accepting that for some the fortnight of bookbuilding will see a benign market but for others the market will kill the deal?

Perhaps we should cross toes as well as fingers in future.

Bank of America Merrill Lynch, Morgan Stanley, KBC Securities and BNP Paribas Fortis were joint bookrunners.

The deal was led by Patersons Securities and may return at a later date. Cape Lambert will not feel too hard done by, as it paid only A$40m for the mine as part of its A$135m acquisition of assets from CopperCo.

In December last year, mining firm Talison Lithium also pulled its up to A$196m IPO, managed by Macquarie. That deal could still be resurrected if the All Ordinaries index picks up.

Bankers suggest a high proportion of sponsor-backed companies planning IPOs are formal dual-tracks – where a sale and IPO are pursued concurrently. Any that are not would still consider a bid that came during the IPO.

In the UK specifically, last year saw investors pumped for huge amounts of cash in offerings by listed companies. There was a suggestion that investors keen to boost returns would in 2010 focus their energies on IPOs. But with Pets at Home going the way of a sale – and bankers saying the decision between that and an IPO had been on a knife edge – and a £930m ABB by Tullow Oil this morning perhaps that is not the case.

For banks focused on revenue it certainly seems relationships with existing floated companies are more valuable than mandates for deals that take a lot of work and may never happen.

The belief of bankers is that the market is simply reacting to poor pricing and the risks of buying new paper so late in the year. But it is hitting Germany hard.

At the end of September Vtion Technologies raised €48.4m through its IPO that priced at €10.75, just below the middle of the €9.50-€12.50 range. It closed last night at €9.

Since then UnityMedia was sold to Liberty Global just as the IPO was about to launch. Hochtief Concessions cancelled at the end of bookbuilding and now Scan Energy has done the same. The second SPAC – Germany2 – was also set to be 2009 business but difficulties with getting liquidity in Germany1 after its acquisition pushed that back.

So a pipeline of €2bn has resulted in priced deals of €48.4m and accounts will remember that in Q1 2010 even if the next name is Brenntag and that alone could total over €1bn.

One of the reasons cited for the failure was Nakheel’s trading – which seems a stretch considering the deal only launched this morning.

A more obvious issue was the launch terms and stingy coupon offered for a risky credit. The leads suggested a credit assumption of 800bp, though conceded some clients would use 1000bp as their benchmark.

Yet of the few internationals to bother pricing up the bonds, Nomura used 1500bp. Unsurprisingly the gap between the two assumptions was crucial. Nomura valued the bonds at just 95.5% on best terms. A CB banker at another firm said the 4.875% coupon offered at the top of the range was nonsense considering the credit.

More impressively the leads, ABG Sundall Collier and First Securities, claimed to have a book at 5.25% with a 22.5% premium. The company decided that was too expensive and walked away.

Tough luck for the banks. Some clients are never happy. You are asked to deliver the impossible, you achieve the improbable and it still isn’t enough.

A rapid process would have seen premarketing tomorrow and then the launch of bookbuilding on Wednesday.

The ambitious timetable rather forgot the need to explain the appeal of the US$20bn market cap firm that has just had to restructure its debt and is still carrying a US$16.8bn burden.

Fortunately for bankers hoping to get some sleep before Christmas, which is incidentally when the stock would have debuted, listing approval was once again declined.

The US$2bn listing is now set for early 2010.