All five IPOs that priced on Wednesday had to slash their valuations in order to complete their offerings, as last week’s sell-off and concerns over market volatility forced companies to offer shares below their original ranges. Wednesday had the most IPOs price below their original range in a single day since June 9, 1998, when five of seven deals priced below their range. However, unlike the five June 9, 1998, deals, which showed lackluster returns across the board in their first day of trading (average loss of 2%), four of the five deals that cut their valuations on Wednesday produced positive returns (average gain of 5%) in their first day of trading. Aratana Therapeutics (NASDAQ:PETX), which traded up 38%, had the best first-day performance of the group. Despite the strong returns, none of the companies that priced on Wednesday have traded up to their original ranges, indicating that, even with the market’s rebound this week, investors are still turned off by the original valuations proposed by these companies.
|IPO Pricings - Wednesday, June 26, 2013||*$ in mm|
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Aratana, which focuses on developing medications for cats and dogs based on therapies for humans, postponed its offering last week before slashing its proposed valuation by 46% to complete the deal. Silvercrest (NASDAQ:SAMG), an investment company with $13.6 billion in AUM for ultra high net worth individuals, failed to complete a November 2012 IPO and came back to the market after acquiring $1.9 billion in assets in March 2013. HD Supply (NASDAQ:HDS), a leading industrial distributor in the U.S. backed by Bain Capital, The Carlyle Group and Clayton, Dubilier & Rice, had hoped to become the fourth billion-dollar IPO of 2013, but ended up raising $957 million after pricing at $18, well below its proposed $23.50 midpoint.
Tremor Video (NYSE:TRMR), an online video advertising network, raised $75 million after pricing its IPO at $10, 17% below the $12 midpoint. Tremor’s reduced valuation came in the wake of disappointing returns from fellow advertising technology IPOs Marin Software (NYSE:MRIN) (-27% since its IPO) and Millennial Media (NYSE:MM) (-33%). CDW (NASDAQ:CDW), a Madison Dearborn-backed reseller of IT hardware and software products and provider of integrated IT solutions, originally set a price range of $20 to $23 before cutting the range to $17 to $18, and ultimately pricing at $17. CDW, which had originally proposed a $500 million deal size, raised $395 million in its IPO, a 21% decrease.