Initial public offerings in 2012 slumped to the lowest level since the financial crisis as signs of an economic slowdown and Facebook Inc.’s disappointing debut curbed demand and prompted companies to push back sales.

IPOs have raised $112 billion worldwide this year, the least since 2008, according to data compiled by Bloomberg. Initial sales in western Europe dropped to one-third of last year’s level, while concern about China’s economy helped cut proceeds in Asia by almost half. U.S. offerings raised $41 billion, little changed from last year, as Facebook’s IPO spurred a monthlong drought in U.S. deals.

With the possibility of $600 billion in U.S. spending cuts and tax increases that could cause another recession also weighing on the IPO market this year, the global backlog of potential offerings has now swelled to the largest year-end size since 2007, data compiled by Bloomberg and Ipreo show. That could set the stage for a rebound if lawmakers avert the so- called fiscal cliff, according to Credit Suisse Group AG and Barclays Plc, with companies from China Petrochemical Corp. to ING Groep NV poised to potentially move ahead with offerings.

“A lot of people have been very selective,” Joe Castle, head of equities syndicate at Barclays, said at a briefing this month in New York. “If we see some deals go out early in the year that go well and trade well, then it feeds on itself for more volume to come out in the U.S. and on a global basis.”

Europe Surge

In the fourth quarter, IPOs in western Europe surged more than fivefold from a year earlier to $5.71 billion, and U.S. initial offerings increased 15 percent to $8.8 billion, data compiled by Bloomberg show. First-time share sales in Asia fell by 46 percent to $10.9 billion, the data show. Globally, IPOs this quarter edged up to about $32.4 billion from $29.5 billion in the year-earlier period.

The annual global IPO tally declined for a second straight year as Europe slipped back into a recession, cutting the amount raised in the region by about two-thirds to $9.91 billion. In Asia, the biggest region for IPOs, proceeds fell by 43 percent to $46.7 billion. The U.S. total barely eclipsed last year’s mark, even including the $16 billion debut of Facebook, the biggest technology IPO on record.

After Facebook fell as much as 32 percent in the first three weeks after its IPO, companies such as Party City Holdings Inc. and American International Group Inc.’s airplane-leasing unit pulled planned offerings in favor of private sales.

Swollen Backlog

The global IPO backlog swelled to about $115 billion at the end of this year, including a sale by Japan Post Holdings Co. that’s planned for 2015, according to Ipreo, a New York-based provider of market data. Excluding that offering, the backlog would be about $65 billion, larger than the $52 billion a year ago, the data show.

“Many companies may have felt that the broader economic environment and their resultant earnings didn’t represent the true worth of their businesses,” Darrell Uden, co-head of equity capital markets for Europe, the Middle East and Africa at Zurich-based UBS AG, said in a phone interview. “Many chose to wait for a few more earnings cycles to ensure a better valuation.”

U.S. lawmakers last week scrapped a proposed plan for higher taxes, stalling budget talks and fueling concern that the officials will fail to prevent tax increases and spending cuts from taking effect in January. President Barack Obama and the Republican-led U.S. Congress returned to Washington yesterday with five days left to reach a deal.

Cash Pile

Unease on the part of companies and investors may give way to an increase in new-share sales as a possible rise in mergers and acquisitions prompts more fundraising for strategic takeovers, according to Alasdair Warren, co-head of investment banking in Europe at New York-based Goldman Sachs Group Inc. Global M&A in the fourth quarter rose to the highest since 2008 as companies started to draw on cash piles totaling more than $3.5 trillion to make acquisitions.

“In the period post summer, there’s been a pickup in issuance, but overall there’s still a degree of nervousness and uncertainty in the market,” Warren said in a phone interview. “In the first half of next year you are going to see more meaningful primary capital raisings in the corporate space, in many cases to improve strategic flexibility.”

Direct Line

In Europe, the fourth quarter was this year’s busiest for IPOs, picking up even after the region’s economy shrank for the second quarter in a row during the July-September period. IPOs in Europe since 2007 haven’t managed to recover to even half of their pre-crisis level, data compiled by Bloomberg show, as concerns over sovereign debt across the region have persisted.

Telefonica SA’s German unit Telefonica Deutschland Holding AG raised 1.45 billion euros ($1.9 billion) in October in Europe’s largest IPO in 2012, listing in Frankfurt. Britain’s Direct Line Insurance Group Plc raised $1.5 billion in October, and Russia’s OAO MegaFon raised $1.8 billion in November. All three offerings were increased after underwriters exercised over-allotment options to buy more shares.

There may be additional large telecom IPOs from Europe next year, as Telefonica seeks to raise as much as 6 billion euros by listing its Latin American assets, and Deutsche Telekom AG evaluates a sale of its stake in a venture with France Telecom SA. Privatization sales, including that of state-owned postal service Royal Mail, are also being lined up.

Creating Capital

“As cash-strapped governments in Europe look for ways to create new capital, more state-owned entities will come to market next year to repay government debt and reinvest in new assets,” said Maria Pinelli, global vice chairman at Ernst & Young LLP in London, who oversees the firm’s IPO advisory business.

Separately, ING U.S. Inc., an insurance unit of the largest Dutch financial-services company, filed for a New York IPO in November. ING Groep was ordered by the European Union to sell insurance operations, its U.S. online bank and a Dutch mortgage lender before the end of 2013 as a condition for approval of a 2008 bailout.

Slowing growth in China for a seventh straight quarter hampered Asia’s IPOs, even as People’s Insurance Co. (Group) of China Ltd. raised $3.6 billion in a Hong Kong initial sale last month. Companies raised $5 billion in Hong Kong in the last three months of the year, down 24 percent from the year-earlier period, while deals in China in 2012 reached $15 billion, down 64 percent.

Proceeds from Hong Kong IPOs, which are at the lowest since 2003, may rebound next year as the Chinese economy improves, said Michiya Tomita, a fund manager at Mitsubishi UFJ Asset Management Co., which oversees $70 billion.

China Petrochem

China Petrochemical, the nation’s biggest refiner, plans to seek about $1.5 billion in an IPO of its engineering unit, people with knowledge of the matter have said. The IPO of Sinopec Engineering (Group) Co. may start in Hong Kong in the second half of 2013.

Japan’s biggest IPO this year helped narrow the region’s loss of deal volume. Japan Airlines Co. raised 663 billion yen ($7.7 billion) on Sept. 10, bringing Asia’s value of initial sales to just over half the amount raised in 2011.

Elsewhere in Asia, Malaysia’s IPOs raised $6.5 billion in 2012, data compiled by Bloomberg show. About half of that was the May debut by palm-oil maker Felda Global Ventures Holdings Bhd. Malaysia’s economy is set to expand 4.8 percent next year, nearly double the anticipated global rate of 2.45 percent, according to economists surveyed by Bloomberg.

“Investors have begun to realize the growth potential of Southeast Asia and the bright prospects of companies here,” Dato’ Charon Wardini Mokhzani, chief executive officer of CIMB Investment Bank, said in an e-mail. “The success of the Malaysian IPOs and the overwhelming demand from domestic and international investors for those IPOs have given other issuers the confidence to proceed with their respective IPOs.”

Oil, Gas

The amount of money raised in IPOs globally this quarter was about 44 percent greater than in the previous three months, data compiled by Bloomberg show. The quarterly proceeds were boosted by a combined $2.3 billion of oil and gas IPOs that Credit Suisse led, helping the bank surpass JPMorgan Chase & Co. for the year’s biggest share of U.S. IPO underwriting for the first time since at least 1999, the data show.

Morgan Stanley was the top global IPO underwriter for the third straight year in 2012, beating JPMorgan after helping lead the Japan Airlines IPO.

New Stock

While a resolution to avert the so-called fiscal cliff in the U.S., continued momentum in Asia’s emerging markets, and more government privatizations in Europe would help spur increased IPO activity next year, fluctuations in the broader equity markets may mean that companies will have to move quickly to complete sales, said Ernst & Young’s Pinelli.

The market will see further benefit next year if investors are willing to put more money into equity mutual funds, enlarging the pool of cash available for new stock, according to David Hermer, Credit Suisse’s head of Americas equity capital markets. Investors have withdrawn money from equity mutual funds in favor of bonds every year since 2009, with outflows from stocks totaling $135 billion this year, according to the Washington-based Investment Company Institute

“There should be a continued pickup in IPO volumes,” Hermer said in a phone interview. “But at the same time, you need a receptive market to be able to absorb that.”