Exciting Week for U.S. IPO Market

Includes: ARX, BAH, BITA, CZR
by: Renaissance Capital IPO Research

Friday's flurry of filings, which included four companies submitting their S-1s and three others specifying terms for their upcoming IPOs, marked an exciting week for the US IPO market: General Motors' (NYSE:GM) highly anticipated $15.8 billion offering was one of six that were successfully completed this week, bringing the total number of priced IPOs year-to-date to 130, more than doubling the 63 deals completed for all of 2009.

Though General Motors took the spotlight this week as the third largest IPO in US history, government consultant company Booz Allen Hamilton (NYSE:BAH) also attracted interest among IPO investors and was the top performer of this week's crop, ending the week up 14% from its IPO price of $17 per share. The consultant giant booked more than $5 billion in sales last year and reported an impressive backlog of roughly $11 billion as of September 30, 2010. Caesars Entertainment (NASDAQ:CZR), the world's largest casino operator, was another high-profile deal slated to approach the public market this week. However, two weeks after announcing plans to raise $500 million in its IPO to fund pipeline projects in Las Vegas, Cleveland, Cincinnati and Philadelphia, the company shelved the deal, citing poor market conditions. Caesars' highly leveraged balance sheet (roughly $19 billion in debt) and lack of exposure to fast-growing markets in Asia likely contributed to disappointing deal demand from IPO investors.

Chinese ADRs continued to flood the US market with BitAuto Holdings (NYSE:BITA) listing on the NYSE on Wednesday. The company, which is the leading provider of online advertising services for China's car dealers and automakers, raised $127 million in its IPO and traded flat in its debut. ADR activity levels are expected to remain high with five out of this week's nine initial IPO filings submitted by China-based companies. Specialized chip company Aeroflex Holding (NYSE:ARX) also traded flat after pricing at the low end of the range and listing on the NYSE on Friday, closing exactly at its IPO price of $13.50 per share.

High volume levels coupled with modest performance this week signal a dynamic yet disciplined IPO market as investors face an increasing array of IPO options. Though the IPO calendar shows next week will see a pause in activity with Thursday's holiday, this week's wave of filings indicates a rebound will likely follow in December and continue well into 2011.