Small-cap equity funds had few free kicks from an initial public offering (IPO) market that went from sick to comatose in the past 12 months.

Investor Weekly analysis shows only 16 of 71 IPOs in 2011/12 finished the year ahead of their issue price. Twenty were down more than half.

The analysis excludes debt issues, compliance listings and the listing of options associated with IPOs, and includes companies that raised capital and listed.

It shows an IPO market that is raising increasingly less capital and performing even worse than during the peak of the global financial crisis in 2008.

The median share price loss of IPOs (against the issue price) in 2011/12 was 20 per cent.

About $1.26 billion was raised through IPOs in the 2012 financial year.

The median capital raising was $5 million and the median value of companies listed was just $8 million.

Most IPOs were too tiny for small and micro-cap equity funds, and had to rely on the networks of their directors for funding.

Many will have to go back to market within 18 months to raise more capital, often with depressed with share prices.

Only a handful of floats attracted serious attention from several small-cap funds.

They included Trade Me Group, Collins Foods, GI Dynamics and Alliance Aviation Services.

The float of online auctioneer Trade Me Group was arguably the best of 2011/12.

Spun out of Fairfax Media, Trade Me raised $274 million and listed in December.

Its $2.04 issued shares have raced to $2.93 and Fairfax has reduced its ownership from 66 per cent to 51 per cent to raise capital for restructuring.

Alliance Aviation Services also performed well. The airline, which services 'fly in, fly out' resource workers, raised $74 million and listed in December. Its $1.60 shares have rallied to $2.16 despite resource-related stocks struggling in the past few months.

The Collins Food IPO was a disaster by comparison.

The quick-service restaurant group raised $232 million and since its August 2011 listing the $2.50 issued shares have slumped to $1.13.

A downgrade to prospectus earnings forecasts within four months of listing surprised the market and further dented the ailing reputation of private-equity-vended floats, which had been battered after the poorly performed 2009 Myer Holdings and Kathmandu Holdings IPOs.

United States-based medical-device maker GI Dynamics did well to raise $80 million and stay within sight of its issue price after listing in September 2011 in a terrible market for small life sciences companies.

After a weak start, GI shares headed back toward their $1.10 issue price, then weakened to 87 cents in recent months.

Osprey Medical, another US-based device maker, also caught the attention of some small-cap funds.

It raised $20 million, listed in May 2012, and its 40-cent issued shares have hovered within a few cents of the issue price, in what was arguably one of the better capital-raising efforts and showings of aftermarket support.

For all the IPO horror stories, the big news in 2011/12 was about companies that did not list, rather than those that did.

Several IPOs touted for the first half of 2012 did not materialise because of the bear market and investor risk-aversion towards new offers.

The most notable IPO absentees were Gemsworth Financial's Australian Mortgage insurance business and mining services group Barminco.

Macquarie-based OzForex Group was another to shelve its IPO plans for 2012, and Ventus Medical disappointed life sciences followers when its $40-million capital raising was abandoned because of poor market conditions.

At this stage, there will be little IPO joy for institutional investors in the first half of 2012/13.

Most of the current 18 IPOs that have applied for official admission to the Australian Securities Exchange are micro-cap explorers, and at least half of them are struggling to close their offers and unable to advise a listing date.

A bigger problem is the scepticism among small-cap equity funds towards private-equity-vended IPOs.

Private equity is an important source of IPOs as such firms use capital raisings and share-market listings to exit their investments.

But only extremely well-priced IPOs are likely to get away in this market, which means less incentive for private equity firms to choose IPOs over other exit strategies, such as trade sales to companies and secondary sales to other private equity firms.

The upshot is far fewer floats that are large enough, and of sufficient quality, to attract institutional investors.

The days of small-cap equity funds getting preferential access to IPOs priced at a 10 per cent to 20 per cent discount to the company's fair valuation seem a distant memory.