The fourth quarter got off to an active start this week as six of seven deals on the calendar priced. The trend of pricing pressure continued in October’s first week as four of six deals priced at the low end or below their range. Since July 25, 18 of 26 IPOs, or roughly 70% of all deals, have priced at the low end or below their range, which has reflected investor demand for valuation discounts. Further evidence of price sensitivity was Dave & Buster’s pulled offering, which became the latest company to postpone or withdraw amid valuation pushback, a list that includes the restaurant group CKE and guitar maker Fender Instruments.
While the pricing difficulties continued a trend viewed since the last week of July, the deals’ week trading was a surprising departure. Three deals closed below their offer price on the first day including Berry Plastics, LifeLock and Javelin Mortgage. One would have to go back to May 9 to include the previous three IPOs that traded down in their first day. Additionally, Fleetmatics was the only company to price above its midpoint, and while it closed up 31% in its first-day of trading and pushed this week’s average first-day pop to 5%, the week remained well below the average first-day return year-to-date, which currently stands at 14%.
Week of October 1 IPOs
|Company (Ticker)||Business||Deal Size ($mm)||First-day return|
|Luxfer Holdings (LXFR)||High-performance materials|| |
|LifeLock (LOCK))||Online ID protection|| |
|Javelin Mortgage (JMI)||Mortgage REIT|| |
|Berry Plastics (BERY)||Plastic goods|| |
|Regulus Ther. (RGLS)||MicroRNAs treatments|| |
|Fleetmatics (FLTX)||Fleet management|| |
IPOs on tap for the week of October 8
Next week’s calendar is busy with nine deals and includes companies from a variety of sectors including two biotechs, two energy and three technology companies. Indian rice producer Amira Foods (ANFI) is seeking to be the first Asian company to list on the US markets since China’s Vipshop Holdings in March 2012. Workday (WDAY) and Shutterstock (SSTK) look to be the next on-demand enterprise companies to cash in on investor enthusiasm, which has seen 12 of 13 enterprise-focused subscription-based companies ring up positive first-day returns this year. Realogy (RLGY), the second Apollo-backed company to go public in as many weeks, is expected to be the first $1 billion US LBO to go public since 1Q11, when there were three (Nielsen Holdings, Kinder Morgan and HCA Holdings).
If all deals price next week, there will have been 15 offerings through the first two weeks of October, equal to the total amount of IPOs we had in August and September combined. It would mark the most pricings in a single week since December 6, 2010. In fact, there would only need to be six more IPOs in the last two and a half weeks of October to mark the first month since November 2007 to have more than 20 IPO pricings.