U.S. IPO Market Posts Mixed Results as Investors Remain Selective

by: Renaissance Capital IPO Research

The US IPO market saw mixed results this week with seven companies originally scheduled to come to market but only three successfully completing their deals.

Two of this week's crop of IPO pricings were Chinese ADRs, which have been well-received by IPO investors over the last several weeks. Global Education & Technology (NASDAQ:GEDU) was the best performer, ending the week up 16% from its IPO price of $10.50. It raised $67 million after pricing 6.38 million ADRs at $10.50, the high end of its proposed $8.50-$10.50 range. The company is a leading provider of foreign language test prep and is taking advantage of China's growing education services market, as is upcoming IPO TAL Education Group (XRS).

Solar company Daqo New Energy (NYSE:DQ) was the other China-based IPO to list in the US this week. The company, which manufactures high-quality polysilicon, had previously attempted to go public in January before shelving the deal. It raised $76 million by offering 8 million ADSs at $9.50, below the $10.50-$12.50 range. The stock rose 8% on its first day of trading and fell slightly in the aftermarket, ending the week up 7% from its IPO price.

Ellington Financial (NYSE:EFC), a specialty finance company that invests in RMBS and derivatives, raised $101 million by offering 4.5 million shares at $22.50, within its proposed $22-$24 range. Like Daqo New Energy, it was Ellington Financial's second attempt in going public; it had previously filed to offer 7.7 million shares at $25-$27 before postponing the deal in December 2009.

Investors continued to be selective with two IPO postponements and two deals pushing back their pricing dates. LINC Logistics (LLGX), which provides transportation and logistics services primarily to the US auto industry, postponed its $138 million IPO on Thursday citing unfavorable economic conditions. Campus Crest Communities (NYSE:CCG), a self-managed REIT focused on high-quality student housing properties, also ended up shelving its deal. Two other REITs, US Federal Properties Trust (USFP) and Legacy Healthcare Properties Trust (NYSE:LRP), set their scheduled pricing dates as day-to-day after originally planning to go public this week.

Though this week's IPOs posted mixed results, IPO activity remains high with nine companies announcing terms for their deals this week, the highest level seen in at least a year. IPOs slated to go price next week include prepaid debit card company NetSpend Holdings (NASDAQ:NTSP), fast fashion retailer Body Central (OTCPK:BODY) and Cerberus-backed provider of structural components Tower International (NYSE:TOWR).