U.S. IPOs Rebound This Week Led by Well-Received Zillow

by: Renaissance Capital IPO Research

Five deals priced this week, led by the enthusiastically welcomed online real estate marketplace operator Zillow (NASDAQ:Z). The company raised $70 million on Tuesday by pricing its IPO at $20, above its upwardly revised range of $16 to $18. Internet-based stocks have been well-received by investors this year, and Zillow seems to be no exception. The company's stock soared to $60 in its debut (+79%), earning Zillow a spot in third place on our list of highest first day returns year-to-date, following Chinese Internet company Qihoo 360 (QIHU, 134% first day pop) and social networking site LinkedIn (LNKD, 109%).

Trendy headphone maker Skullcandy (NASDAQ:SKUL) also priced its upsized IPO on Tuesday, selling 9.4 million shares (up from 8.3 million) at $20, above its proposed $17 to $19 range. Skullcandy traded up 15% to $23 in early morning trading, but ended its first day flat. The company's stock closed Friday down 2% from the IPO price. Women's boutique chain Francesca's Holdings (NASDAQ:FRAN) raised $170 million from its IPO, pricing its shares at $17, above its proposed $14 to $16 range. The retailer's stock earned a first day return of 63%, placing Francesca's fourth in our list of first day returns. Investors were likely attracted to the plans to rapidly roll out new stores in 2011 and 2012. Francesca's, which currently operates 249 locations in 38 states, sees potential to expand to 900 stores in seven to ten years. The IPO market is poised to see an increase in consumer-oriented deals with specialty tea retailer Teavana (TEA) and giant coffee franchisor Dunkin' Brands (NASDAQ:DNKN) scheduled to price next week.

The week closed on a more subdued note with two deals pricing in-line with expectations. Sunoco carve-out SunCoke Energy (NYSE:SXC) priced at the midpoint of its proposed range at $16, raising $186 million in proceeds. SunCoke rose 6% in its first day of trading. Meanwhile Apollo-managed REIT Apollo Residential Mortgage (NYSE:AMTG) sold 10 million shares at $20, as planned. It closed down 7% from its IPO price on Friday.

The IPO market kicks into high gear next week, with 12 deals on the US IPO calendar, including the above-mentioned Teavana and Dunkin' Brands, specialty food distributor Chefs' Warehouse (NASDAQ:CHEF), and on-demand software company Tangoe (NASDAQ:TNGO). If all deals are successfully completed, it will be the busiest week for US IPOs since November 2007. With IPOs up 13% on average this year, investor interest in the sector is returning.