Second-Busiest IPO Week This Year Shows Mixed Performance

by: Renaissance Capital IPO Research
This week was the second-busiest IPO week of 2009 with network security specialist Fortinet (NASDAQ:FTNT) making its debut on Wednesday, followed by four additional companies that began trading today. Fortinet led the group with a first day pop of 33%, climbing even higher in the aftermarket to a total return of 35.8%.

The companies that traded today were Archipelago Learning (NASDAQ:ARCL), 7 Days Group (NYSE:SVN), Global Defense Technologies (NASDAQ:GTEC), and Cloud Peak Energy (NYSE:CLD), spanning a wide range of industries from education to energy. Archipelago Learning, an online education company, and 7 Days Group, the third largest economy hotel in China, posted respective first day gains of 13.8% and 13.6%. Attractive margins seemed to appeal to investors in the case of Archipelago's offering, while an aggressive growth strategy and China's expanding economy were the main drivers for 7 Days.

Global Defense Technologies, a US defense contractor, remained flat with a closing price of $13.08, up only 8 cents from its opening price. Finally, Rio Tinto (RTP) carve-out Cloud Peak Energy traded down 1.3% in its first day of trading after pricing its shares at $13, below its proposed range of $14-$16. Weakening demand in the coal market and falling volume may have contributed to investor resistance.

Activity is expected to pause with next week's holiday; however, with eight companies submitting their initial filings and another announcing pricing terms this week, the IPO market is expected to remain robust for the rest of the year and into 2010.