Closing Out Busiest IPO Week Since 2007

Seven IPOs debuted this week, making it the most active since mid-December of 2007. Two IPOs began trading on Friday. Shanda Games Limited (GAME), a spin-off of Shanda Interactive's leading online games business in China, raised just over $1 billion by offering 83,500,000 ADSs at $12.50 per ADS, the high end of the range of $10.50 to $12.50. Shanda's offering marks the first US-listed IPO to raise more than $1 billion in 2009 and the second Chinese online game company to go public this year, following the $120 million IPO by Changyou.com (CYOU) in April. Shanda closed at $1.75, down -14% from its IPO price.

Select Medical Holdings (SEM), a leading operator of specialty hospitals and outpatient rehabilitation clinics, raised $300 million by offering 30 million shares (3.33 million shares fewer than anticipated) at $10, below its proposed $11 to $13 range. This is the second time for Select Medical to become a publicly traded entity. The company first went public in April 2001 at a split-adjusted IPO price of $4.75 and was taken private by its original financial backers Welsh Carson and Thoma Cressey (formerly known as GTCR) in 2005 at $18, a 279% premium. Select Medical Select Medical also broke its IPO price in early trading, but managed to recover its losses and ended the day at $10.09, up about 1%.

Five IPOs launched Thursday, lead by a highly-anticipated offering from A123 Systems (AONE), which provides rechargeable lithium-ion batteries and battery systems. After giving back some of its first day gains, A123 Systems still topped the pack, closing up 45% from its $13.50 IPO price. The strong reception for A123 Systems, a venture-backed company that has yet to turn a profit, is welcome news to many VCs and start-ups that have poured lots of money into the alternative energy space.

Thursday’s IPOs also included Julius Baer spin-off Artio Global Investors (ART), which raised $650 million by pricing at $26, the top of its IPO range, and online retailer Vitacost.com (VITC) which raised $132 million, by offering 11 million shares at $12, the midpoint of the $11-$13 range. Mortgage REITs Apollo Commercial (ARI) and Colony Financial (CLNY), both priced their offerings at $20, after halving their deal sizes on Wednesday, and promptly traded below their IPO price on Thursday. Fellow REIT Foursquare Capital (FSQR) had also planned an IPO for this week, but postponed its deal on Thursday.

September’s IPO wave is not finished yet, as there are an additional four deals on the calendar for next week: mortgage REIT Ladder Capital Realty Finance (LGC), biopharmaceutical Talecris Biotherapeutics (TLCR), technology-based logistics firm Echo Global Logistics (ECHO), and postsecondary education provider Education Management Corporation (EDMC).

Comments

[Mad Hedge F...:]

bft ) The spectacular debut of the IPO for A123 Systems (AONE), a maker of high powered, quick recharging lithium ion phosphate batteries using advanced nanophoshate technology, put a great shining spotlight on a sector I have been harping about all year (search my data base for “Butch Cassidy” by clicking here at www.madhedgefundtrader... ). The initial price talk was at $8, the IPO came out at $13.50, and the first day of trading took it up to a meteoric 43% to $19.20 on the first day! I had a flashback to the dot.com boom. Where are the gold flecks on the sushi, my free IPO hat, and the vodka luge? The fact is that this is an industry that is going to be huge in the next 20 years. The market for lithium ion batteries, which offer a 4X improvement over ferrous oxide predecessors in energy stored per unit of weight, is expected to grow from $32 million this year, to $74 billion by 2020. That is no typo; I really did leap from millions to billions. Their use is expected to spread from cell phones, to the electric car industry, to endless other applications. We are still in the ground floor elevator of the Empire State building. But outside of a few stocks like Chile’s Sociedad Quimica Y Minera (SQM), there have been few ways in which an investor can get involved in the lithium space (see my call to buy the stock in February before its healthy 60% move up at www.madhedgefundtrader... ). So when a small company like A123 opens a window, the investors dog pile in. Watch this space. Lithium could be the new crude, and companies like A123 could become the next Exxon (if Exxon doesn’t become the next Exxon). Kiss up to your long neglected broker and try to get in on the next allocation. And check out my gratuitous Robert Redford photo below.

Sep 27 11:07 AM