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Alibaba's (ABABA) highly anticipated initial filing arrived on Tuesday, just as the US IPO market was experiencing its lowest performance levels of the year as measured by the Renaissance IPO ETF. If Facebook was the iconic technology IPO of 2012 and Twitter held the title in 2013, then Alibaba's size, growth, profitability and significance in China make it the standout IPO of 2014, and possibly the decade. The company could raise $20 billion, which would make it the world's largest public offering ever and larger than the combined 132 US IPOs from Chinese companies since 2005. Alibaba competitors JD.com (JD) and Jumei International Holdings (NYSE:JMEI) also moved forward on US IPOs, setting pricing terms for $1.6 billion and $195 million offerings, respectively.

Recent IPOs, technology IPOs in particular, continued to trade down in the midst of earnings season. Signaling optimism about the coming weeks, the eight companies to set terms included four from the tech sector. The IPO market's poor performance is partially due to the unusually large number of smaller, more speculative companies that have dominated the IPO landscape. So despite the year's high IPO count (104), last week Europe overtook the US in IPO proceeds raised year-to-date. Larger IPOs have become more common, as UK-based financial information provider Markit notably filed for a $750 million US IPO. The week also featured the 100th US IPO of the year, at a time when over half of IPOs to date were trading below their offer price.

Two energy LPs price

Following a streak of 16 IPOs pricing below the midpoint of the range, last week's PBF Logistics (NYSE:PBFX) was the first to produce enough demand to price above its range since Zoe's Kitchen four weeks prior. The LP operates PBF Energy's crude oil logistics assets and offers an above-average yield in its peer group. The week's top performer was GasLog Partners (NYSE:GLOP), an LP carved out of GasLog Ltd. that operates liquefied natural gas carriers and also offers an attractive dividend. Both companies' parents completed IPOs in 2012. Dorian LPG (NYSE:LPG), which operates liquefied petroleum gas (propane, butane) carriers, returned 0% after pricing at its midpoint.

Two Chinese tech firms had positive returns. Tuniu (NASDAQ:TOUR), China's largest online provider of packaged tours, priced at the low end of the range and traded up just above its midpoint. Cheetah Mobile (NYSE:CMCM), which provides free security and phone maintenance apps, priced above its midpoint and gained only 2%. Two health care IPOs ended the week flat after pricing below the range. Radius Health (NASDAQ:RDUS), a biotech focused on restoring bone density, postponed its IPO for a second time; it first withdrew IPO plans in November 2012.

IPO pricings (week of May 5, 2014)
Company (Ticker) Business Deal Size ($mm) IPO Price vs. Midpoint Return as of 5/9
GasLog Partners (GLOP) LNG carrier LP formed out of GasLog Ltd. $176 5% 26%
PBF Logistics LP (PBFX) Logistics assets spun out of PBF Energy $316 15% 20%
Tuniu (TOUR) Online provider of packaged tours in China $72 -10% 12%
Cheetah Mobile (CMCM) Chinese mobile security app developer $168 4% 2%
Dorian LPG (LPG) Liquefied petroleum gas (LPG) carriers $135 0% 0%
Alder BioPharmaceuticals (NASDAQ:ALDR) Biotech: antibodies for migraines and arthritis $80 -29% 0%
K2M Group Holdings (NASDAQ:KTWO) Medical devices used in spinal surgeries $132 -12% 0%

Eight companies set terms, half are technology IPOs

Even as technology IPOs continue to get hammered in aftermarket trading (down 25% on average since the first day close), four in the tech industry set terms for upcoming IPOs. JD.com, which is expected to trade next week, should be the largest US IPO out of China since 2004. The company's business model is analogous to Amazon’s, and its $11.5 billion in sales and 82% 2-year sales CAGR could draw investor interest ahead of Alibaba's IPO. Jumei, China's largest online beauty products retailer, features editorial content and flash sales to attract repeat visitors. Set to begin trading this week, Jumei could benefit from the success of close peer Vipshop, which has traded up over 2,000% since its March 2012 IPO.

TrueCar (NASDAQ:TRUE) and Zendesk (NYSE:ZEN) plan to raise about $100 million in IPOs scheduled this week. TrueCar's website allows users to avoid negotiations at the dealership and obtain guaranteed pricing on new cars. Zendesk provides a customer relationship management platform and services for small and medium-sized businesses. Scheduled for next week, 21st Century Oncology Holdings (Pending:ICC) plans to raise $200 million to pay off the debt it used to finance several acquisitions. Two regional financial services firms and a contraception biotech were also added to the IPO calendar.

IPO terms filings (week of May 5, 2014)
Company (Ticker) Business Deal Size ($mm) LTM Sales ($mm)
JD.com (JD) China's largest direct online retailer $1,593 $11,454
21st Century Oncology Holdings (ICC) Largest integrated cancer treatment network $200 $814
Jumei International Holding (JMEI) China's largest online beauty products retailer $195 $483
TrueCar (TRUE) Website that locks in low new car prices $101 $153
Zendesk (ZEN) Customer service SaaS provider $100 $83
Agile Therapeutics (NASDAQ:AGRX) Biotech: prescription adhesive contraceptives $60 $0
First Foundation (Pending:FFWM) California wealth manager and commercial bank $50 $58
Bankwell Financial Group (OTC:BWFG) Commercial bank in Connecticut $50 $30

Chinese e-commerce leviathan Alibaba files for a US IPO

IPO headlines have been dominated by news of Alibaba's initial filing last week. Its Taobao and Tmall websites make up the core business, where the company earns the majority of its revenue from marketing services. The company has made numerous acquisitions and equity investments, including taking a large stake in recent IPO Weibo (NASDAQ:WB), as it competes with rival Tencent. Another, much smaller Chinese tech IPO filing was submitted by Zhaopin (NYSE:ZPIN). Owned by Australian job site firm Seek, Zhaopin is China's most popular career website.

Markit, which provides financial information, valuations and trade processing services, filed for a $750 million IPO. The company is owned by a group of financial services firms including Bank of America, Deutsche Bank, Goldman Sachs and JP Morgan Chase, and it recorded nearly $1 billion in revenue during 2013. As PBF Logistics and GasLog Partners enjoyed well-received IPOs last week, two more energy LPs filed - JP Energy Partners LP (JPEP) and Viper Energy Partners (NASDAQ:VNOM). Midstream asset operator JP Energy is backed by Arclight Capital, while Permian Basin E&P Viper is being spun out of 2012 IPO Diamondback Energy. Another E&P, Eclipse Resources, also filed for a $100 million IPO, but operates in the Appalachian Basin.

IPO initial filings (week of May 5, 2014)
Company (Ticker) Business Deal Size ($mm) LTM Sales ($mm)
Alibaba Group Holding (ABABA) China's largest e-commerce firm $20,000* $7,896
Markit (MRKT.RC) Provides financial data and trade processing $750 $948
JP Energy Partners LP (JPEP) Midstream energy assets $200 $2,124
Century Communities (CENT.RC) Homebuilder in the western US $102 $247
Zhaopin (ZPIN) China's most popular career website $100 $159
Eclipse Resources (NYSE:ECR) Oil and gas E&P in the Appalachian Basin $100 $45
Viper Energy Partners LP (VNOM) Diamondback's Permian Basin E&P LP $100 $15
DermTech (OTC:DMTK) Non-invasive tests for skin conditions $25 $0
* Deal size is RC estimate

IPO market snapshot

So far this year, 104 IPOs have raised $20.0 billion and produced an average first day return of 15%. The Renaissance IPO ETF (symbol: IPO), a cap-weighted basket of newly public companies and indicator of post-IPO performance, has fallen 6% compared with +2% for the S&P 500. Over the last 30 days, the IPO ETF fell 3% compared with +2% for the S&P 500, as IPO valuations continued to be pressured by investors' flight from growth stocks. The active IPO pipeline includes 119 companies looking to raise a total of $45.7 billion.

Source: U.S. IPO Recap: Alibaba Files For What Could Be The World's Largest IPO