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The IPOX Week (4/16/12): How Robust Is The U.S. IPO Market ?


Global equity benchmarks and IPOX weakened into the new week on a stronger dollar, European debt and U.S. earnings. With some non-tech IPOs unable to price during last week, a number of U.S. IPOs in "hot" sectors are set to test the robustness of the U.S. IPO market.


· IPOX Strategies fall:Key IPOX Strategies reversed some of last week's relative performance gains towards the beginning of the week, seemingly susceptible to the rise in global risk. On the global level, e.g., the IPOX Global 50 (IPGL50) fell -0.68% to +16.59% YTD, slightly beating benchmark MSCI World (MXWD). Broader IPOX Global Strategies continued to la and regional performance continued to diverge: In the United States, e.g., the IPOX U.S. IPO and spin-off ETF (TICKER: FPX) retreated from its all-time high set on April 2, 2012 and has declined on 7/9 trading days since. Amid a big move in spreads in U.S. benchmarks in general, this indicates more caution ahead for equities. The IPOX Europe Universe continued to be the most pressured IPOX Strategy, as Italian/Spanish exposure such as Spanish Financials Bankia (BKIA SM) and Caixa Bank (CABK SM) or Italian Utility Enel Green Power (EGPW IM) is hitting new post-IPO lows on European debt fears. Performance within the Asia-Pacific Regions remained solid, however, with the IPOX Asia-Pacific 30 (IPTA) continuing to trade well ahead of the benchmarks. With the Macau casino complex trading well bid, we note new post-IPO highs in IPOX members and Japanese snack-food maker 2011 IPO Calbee (2229 JT) and Australian winery and 2011 spin-off Treasury Wine Estates (TWE AU). Amid a rise in global risk, IPOX Emerging Markets traded mostly lower vs. the benchmarks over the past trading days. An exception is the IPOX Korea 30 (IPXK30K. After falling for much of the year, the portfolio has strongly outperformed the Kospi 200 (KOSP2), still remaining the worst performing IPOX Strategy YTD.

Why choose IPOX to close the IPO/spin-off asset allocation gap?
§ Proven: Real-time performance over market cycles

§ Scalable and Stable: Clearly defined Philosophy

§ Patented: Index Technology

§ Best in Practice: Support and Research

· How robust is the U.S. IPO market ?

Company Code Country Lead Manager
Digital Cinema DCIN US U.S.A. MAXIM
Infoblox BLOX US U.S.A. GS, UBS
Jiangnan Group 1366 HK CHINA DAIWA
Midstates Petro MPO US U.S.A. MS, WFS
Proofpoint Inc PFPT US U.S.A. DB
SandRidge Missi. SDR US U.S.A. BAML, CITI
Synertone 1613 HK CHINA EMPROR
Uchiyama 6059 JP JAPAN DAIWA

IPOs by U.S. firms are set to continue to dominate the global IPO calendar. While some of last week's mostly energy-related deals were delayed, this week's IPOs are in recently "hot" IPO VC-backed sectors will therefore put a more serious test of the strength of the U.S. market ahead of Facebook (FB US). Lossmaking applications software maker Infoblox (BLOX US) is a GS/UBS-led key deal which seeks to raise between USD 90m and USD 105m for a 17% stake, valuing the company between USD 525m USD 616m, a steep 7-8 times sales. The company will receive part of the proceeds. Splunk (SPLK US) is an internet applications software maker which seeks to go public at 8-10 times last year's revenue. The loss-making company's float is expected at 14.5%, giving it a market cap between USD 1bn and USD 1.2bn at the onset. Proceeds are not earmarked for particular projects, but the IPO event is viewed as providing the financial flexibility and to increase visibility in the marketplace. Private-Equity backed Tumi (TUMI US) is a well-established and globally active maker of luggage products. The profitable company uses the IPO to pursue a capital structure event by selling 27% at a valuation between USD1.0bn - 1.2bn or around 3.0-3.5 times sales. The KORS-like strong brand should help the firm to find a quick following within hedge funds/portfolios focused on luxury good and may use its stock to acquire other luggage makers, such as Rimowa, the privately held German maker of Alu-suitcases. Other notable deals in the pipeline include Daiwa-led cable maker Jiangnan (1366 HK), network product maker Synertone (1613 HK) and enterprise software maker Proofpoint (PFPT US), another U.S. tech IPO.

Key IPOX Strategies Returns YTD 2012:

Ticker (BBG/Reuters) Return


YTD 2012 Name
IPGLC (USD) -1.03 12.67 IPOX Global Comp
IPGL100 -1.44 13.21 IPOX Global 100
IPGL50 -0.68 16.59 IPOX Global 50
IPGL30 -1.24 13.16 IPOX Global 30
IPXO -1.43 16.58 IPOX U.S. 100
IPXT -1.42 15.57 IPOX U.S. 30
IXTE (EUR) -2.59 -1.78 IPOX Europe 30
IPXUJPEU (EUR) -2.10 0.99 IPOX Europe 50
IPXUEM -0.81 14.84 IPOX Emerging Mkts.
IPTA 0.18 20.03 IPOX Asia-Pacific 30
IPXUBRIC -1.05 13.31 IPOX BRIC 25
IPXUCHCP 0.09 13.27 Chin IPOX Comp.
CNI -0.18 11.90 China IPOX 20
IPXUCAUP 3.27 8.08 China IPOX Comp.
IPXULATT -1.93 14.20 IPOX LatAm 20
IPXK30K (KRW) -0.23 -3.47 IPOX Korea 30

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