Only 1 IPO Prices This Week Amid Market Meltdown, 12 IPOs Scheduled for Next Week

by: Renaissance Capital IPO Research

Shaken by the U.S. debt crisis, investors fled the markets this week, culminating in a broad sell-off on Thursday. The S&P 500 shed 4%, while the Nasdaq lost 5% for the day. The IPO market suffered casualties as well. Of the three IPOs scheduled for this week, only one managed to price. Reflecting investor sentiment, American Capital Mortgage (NASDAQ:MTGE) limped to market on Thursday, selling 8 million shares (less than half of the originally planned 17.5 million shares) and closing down 8% from its IPO price of $20.

Another victim of the weak capital markets, employee-benefit software provider WageWorks (NYSE:WAGE), slashed its proposed price range by 35% Thursday morning. Originally scheduled to price after the close Thursday, WageWorks pushed back its offering to early next week. Its reliance on acquisitions for growth and the intensely competitive landscape likely contributed to pricing pressure. WhiteGlove Health (WGH), a Texas-based healthcare company, also delayed its IPO to early next week. It was initially scheduled to price the week of July 25.

The markets showed signs of a recovery Friday afternoon, boding well for the swelling U.S. IPO calendar. Twelve deals are scheduled for next week as companies rush to market ahead of the traditional summer hiatus. Joining WageWorks and WhiteGlove on the calendar are a number of companies in the tech space. Online backup solutions provider Carbonite (CARB) and motion sensor manufacturer InvenSense (NYSE:INVN) plan to come to market early next week, while on-demand security software provider Trustwave Holdings (TWAV) is scheduled for later in the week. Technology has been the most popular sector for the US IPO market and has accounted for 30% of deals priced over the last 12 months. These 52 deals raised $10 billion in proceeds and are trading 3% on average above their listing prices.

Three foreign companies are also looking to tap the U.S. markets: Chinese biofuel producer Cathay Industrial Biotech (CBIO-OLD), Hong Kong-based mobile marketer Loyalty Alliance (LAEC), which serves the Greater China market, and Portuguese mobile marketer TIM w.e. (TMWE), which focuses on Latin America and other emerging markets. Also pricing next week are energy trusts Enduro Royalty Trust (NYSE:NDRO) and SandRidge Permian Trust (PER) and regional banks Midland States Bancorp (MSBI) and HomeStreet (NASDAQ:HMST).

Twelve IPOs were scheduled for the week of July 25, but only eight ultimately priced. If all 12 deals are successfully completed next week, it will be the busiest week for U.S. IPOs since November 2007.