While foreign markets consolidated, strength in the U.S. benchmarks propelled the IPOX U.S. to a new historic high. U.S. IPOs dominate the global IPO deal calendar during the upcoming week with three deals representing around USD 5.5 bn of market cap entering the market.
· IPOX Strategy Indexes decline, IPOX U.S. closes at record high, IPOX China surges:A temporary jump in volatility and big weakness amongst key European/Asian stocks slowed the positive momentum in IPOX with the IPOX Global 50 (IPGL50) shedding -1.00% to +17.14% YTD, underperforming benchmark MSCI World (MXWD) by -31bps. (Relative) losses did not extend across the index universe: In the United States, e.g., the IPOX U.S. IPO and spin-off ETF (TICKER: FPX +0.59% to +17.59% YTD and closed at yet another historic high with YTD spreads vs. benchmark Russell 3000 (ETF: IWV widening to +800 bps. U.S. pipeline operator and dividend-heavy Kinder Morgan Inc. (KMI: +3.39%) rose to a post-IPO high as shareholders approved the USD 25bn takeover of pipeline operator El Paso (EP: +3.70). Rare-earth miner Molycorp (MCP US: +25.82%) surged after announcing a USD 1.3bn takeover of Canada's Neo Material Technologies Inc. (+25.82%). The IPOX Europe universe fell with the IPOX Europe 50 (IPXUJPEU) dropping by -1.60% to +7.86% as 05/2011 IPO Glencore International (GLEN LN: -2.69%) slid. Amid the decline in AIA Group (1299 HK: -6.44%) after the USD 6bn share sale by U.S. parent AIG (AIG US: -5.20%) and weakness in China-linked markets with the Hang Seng Enterprise Index (HSCEI: -4.11%) plunging, relative momentum in the IPOX Asia-Pacific 30 (IPTA: -0.92%) remained intact as Wynn Macau (1128 HK: +3.58%) and in Australian consumer staple Treasury Wine Estates (TWE AU: +3.06%) rose. We note a +355 bps. move in the IPOX China 20 (NYSE:CNI) vs. the benchmarks as 10/2011 H.K. IPO Citic Securities (6030 HK: +1.06%) rose to a post-IPO high.
Key IPOX Strategies Returns YTD 2012:
|YTD 2012 (%)||Name|
|IPGLC (NYSEARCA:USD)||-0.99||+15.78||IPOX Global Comp|
|IPGL100||-1.23||+15.95||IPOX Global 100|
|IPGL50||-1.00||+17.14||IPOX Global 50|
|IPGL30||-1.33||+14.50||IPOX Global 30|
|IPXO||+0.59||+17.59||IPOX U.S. 100|
|IPXT||+0.66||+15.32||IPOX U.S. 30|
|IXTE (EUR)||-1.56||+6.33||IPOX Europe 30|
|IPXUJPEU (EUR)||-1.60||+7.86||IPOX Europe 50|
|IPTA||-0.92||+17.94||IPOX Asia-Pac. 30|
|IPXUEM||-1.70||+18.97||IPOX Emerging Mkts.|
|IPXUBRIC||-2.36||+21.28||IPOX BRIC 25|
|IPXUCHCP||-1.43||+17.30||Chin IPOX Comp.|
|CNI||-0.55||+15.55||China IPOX 20|
|IPXUCAUP||-0.60||-12.97||China IPOX Comp.|
|IPXULATT||-3.42||+24.88||IPOX LatAm 20|
|IPXK30K (KRW)||+0.08||+2.19||IPOX Korea 30|
· Most significant IPOs launched (week 03/05/12):
|Company||Ticker||Return / IPO (%)|
|Multi Commodity Ex. of India||MCX IN||+25.65|
|Nationstar Mortgage Holdings||NSM US||+4.29|
11 IPOs launched last week in the global regions with the average (median) IPO gaining a strong +30.09% (+31.16%). Accessible focus was on the IPO of Multi Commodity Exchange of India (MCX IN: +25.65%), the first exchange IPO since the June 2010 IPO of CBOE (CBOE: -0.91%). Its solid debut should support the upcoming IPO of Kansas-City based BATS (BATS:BATS). Mortgage provider Nationstar Mortgage (NSM: +4.29%) was the only U.S. IPO.
· Week Ahead (03/12/2012): U.S. IPOs to dominate
|Demandware Inc||DWRE US||U.S.||Deutsche Bank|
|M/A-COM Tech||MTSI US||U.S.||JEFF, JPM|
|Allison Transm.||ALSN US||U.S.||CITI, CS, GS|
U.S. IPOs are set to dominate the accessible global deal calendar during the upcoming week. We expect continued indiscriminately strong positive feed-back demand for deals in small/mid-caps in specialty industries. Amongst the biggest beneficiaries of this market condition will be GS/Deutsche-Bank-led Demandware (DWRE US), a provider of e-commerce solutions. Founded in 2004, the VC-backed company has seen a proportional increase in revenues and sales, but no consistent profit, over the past years, typical of many small-cap IPOs. It plans to offer an above-average 19.64% of shares outstanding, valuing the company at between USD 350m-410m or 6.19-7.19 times 2011 revenues. Demandware's founder was also founder of Germany's Intershop (ISH2 GY), one of the most notorious boom-bust IPOs of Germany's "Neuer Markt". VC-backed M/A-Com Technology Solutions (MTSI US) is a mature and profitable provider of high performance analog semiconductor solutions. With Q4/10-Q411 revenues declining, it offers a low 12.28%, valuing the company between 769m and 860m, with 65% of proceeds being earmarked for a "special preference payment" to holders of class B convertible preferred stock. The prospectus values the company at between 2.48-2.77 times 2011 revenues. Transmission maker Allison Transmission (ALSN US), a former operating unit of General Motors (GM: -3.14%), is a pure private-equity exit with shareholders offering 11.99%, seeking to raise USD 478m-521m and valuing the company between USD 4.0-4.5bn. The pricing sentiment should benefit from the turnaround in U.S. automakers and strong post-IPO returns in Delphi Automotive (DLPH US) which has gained +44.68% since its November 2011 re-IPO.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.