A Review Of Last Week's IPOs - Part V

Includes: ACRE, ENVI, FB
by: The Value Investor

The Initial Public Offering market remains red hot with the much anticipated offering of Facebook (NASDAQ:FB) just weeks away and equity markets trading around four-year highs, despite a recent pullback. This week I will review the initial public offerings for the week of April 23-27.

Last week's IPO's

Four companies decided it was time to go public last week. Acquity Group Limited (NYSEMKT:AQ), Edgen Group (NYSE:EDG), Ares Commercial Real Estate (NYSE:ACRE) and Envivio (NASDAQ:ENVI) took the jump and got their listing.

On average the IPO's were not a great success which comes as a disappointment after last week's strong results. On average the four new listings lost 6.6% on their first single day, with all debuts closing down.

In total the sample above managed to raise some $400 million in order to finance their business objectives and growth plans, or provide existing shareholders with a cash out.

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Acquity Group Limited

The provider of digital marketing and e-commerce services to 500 corporate customers including Allstate and W.W. Grainger set its issue price at $6 per share, below the initial offering range of $8-$10. Despite a 33% discount from the midpoint of the offering range, shares lost another 4.2% on their first trading day. The firm helps its customers with improvement of their e-commerce websites, digital and mobile marketing to improve online sales. The company plans to use the proceeds to expand in China. In 2011 the company reported $107 million in revenues, up 47% on the year. The company reported a net income of $8 million. At Friday's close the company is valued at 1.3 times annual revenues.

Edgen Group

The distributor to the oil and gas industry providing pipes, valves and heavy plates sells its products to more than 2,000 customers in 15 countries. The company closed the first day with a 14% loss to $9.50 per share, below the initial offering price of $11. This compares to an expected public offering range of $14-$16. The company reported revenues of $912 million for the full year of 2011, an increase of 45% on the year. Shares are valued at merely 0.2 times annual revenues as the company reported a full year loss of $24 million.

Ares Commercial Real Estate

The specialty finance company which originates and invests in middle-market commercial real estate loans lost 2.7% on its opening day. The company which is set up as a real estate trust went public for $18.50 per share, below its previously guided offering range of $19-$20 per share.


The telecom software specialist closed its first day down 5.7% from its official offering price of $9. The company eventually sold 7.8 million shares below its previously guided range of $10-$12 per share. The software producer and distributor of internet protocol based video solutions has 300 customers in more than 50 countries. The company reported a 69% increase in its annual revenues to $51 million for its fiscal year of 2012. This valued the company at 5 times annual sales.


The initial public offering market has seen some weakness after a strong performance last week. Besides the poor performance of the listings this week, which all saw negative first day returns there were also two cancellations during the week.

Supernus Pharmaceuticals delayed its offering until next week after failing to price its offering. China Auto Rental pulled its offering altogether with appetite running low for Chinese public offerings.

The weak offering market in the recent week might lead to nervousness among Facebooks' current shareholders who fear that a "soft" public offering market and a standstill in global equity markets might have lowered investors' demand for the much anticipated offering.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.