7 Diverse U.S. IPOs Test Investor Appetites This Week

by: Renaissance Capital IPO Research

A total of seven US companies went public this week, testing IPO investor appetite amidst broader US market gains driven by the release of favorable consumer sentiment data and turmoil in Egypt.

Kinder Morgan (NYSE:KMI) raised $2.9 billion in its IPO, which was 30% larger than originally anticipated and generated one of the largest independent midstream energy stocks currently traded. The company, which was taken private in a $22 billion buyout in 2006, owns GP and LP interests in NYSE-listed LP Kinder Morgan Energy Partners (NYSE:KMP). The stock climbed a modest 4% in its Friday debut.

Gevo (NASDAQ:GEVO), a company on the other end of the energy spectrum, raised $107 million in its offering. The company, which makes biobased alternatives to petroleum-based chemicals and fuels, was well-received by investors; after pricing at the high end of its $13 to $15 range, shares rose 11% by the end of the week. Energy could play an increasingly active role in the upcoming IPO market given a high number of recent IPO filings from the space.

Healthcare also remained active, representing three of this week's seven deals. Early stage biotech AcelRx (NASDAQ:ACRX) slashed its offer price to $5 per share from the original $12 to $14 range, raising $40 million, of which 60% was purchased by existing venture backers. The company is developing a Phase 3 treatment for acute post-operative pain and is the third biotech to go public so far this year, after Pacira Pharmaceuticals (NASDAQ:PCRX) and Endocyte (NASDAQ:ECYT). Both Pacira and Endocyte were also forced to cut their IPO prices by more than 50% from the midpoint of their initially proposed ranges. AcelRx fell 9% on its first day of trading.

Medical device company Kips Bay (NASDAQ:KIPS) priced its downsized IPO at the low end of its $8 to $10 range and stalled in its debut. Though the company is led by experienced executives including the founder of St. Jude Medical and Guidant, its risk-profile remains high; its vein support technology has been tested in only one human trial, for which efficacy results were inconclusive. Fluidigm (NASDAQ:FLDM), which makes high-throughput sequencing devices and consumables for genetic labs, also priced at the low end of its range of $13.50 to $15.50, but traded up 4% by the end of the week. The company's attractive addressable market and razor / razor blade model likely contributed to investor interest.

The IPO market is expected to slow next week with only two deals on the IPO calendar: Chinese menswear designer Zuoan Fashion (ZA) and VPN services provider Masergy Communications (MSGY). However, an uptick in filings including high-profile companies such as Freescale Semiconductor (FSHI) and Pandora Media (NYSE:PM) implies deal flow will soon return.