Led by the blockbuster Workday (
) and Realogy (
) IPOs, all nine companies on the
US IPO calendar
priced this week, closing off a very active period in the market.
There have been 23 US IPOs since September 16, making it the
busiest four-week period since 23 companies priced in
January-February 2011. Not since 2007 have more
within a month. And while Amira Nature Foods (
) became the fourth company in October to trade down on its first
day, five companies had greater than 20% first-day pops, the most
in a week since 2004.
Highly-anticipated Workday IPO gains 74%
Two high-growth technology companies, Workday and Shutterstock (
), priced above the range and gained significantly. Workday, an
on-demand enterprise software company, raised $637 million on
Thursday to make it the biggest technology IPO since Facebook
(FB). It was one of the most anticipated IPOs of the year, with
revenue growth exceeding 100%, and a backlog of over $500
million. Workday's first-day gain of 74% was the fifth highest of
2012. Shutterstock, an online marketplace for royalty-free
images, gained 29% this week on the strength of its
business-focused subscription model and 40% revenue growth.
Bet on US housing market boosts Realogy
Realogy, a franchisor of residential real estate brokerages, and
Linn Co (LNCO), which holds interests in US oil and natural gas
company Linn Energy (
), both raised more than $1 billion. Realogy gained 24% as
investors bought into signs of a US housing recovery. Linn Co,
which was essentially a secondary offering for Linn Energy (the
two companies differ only in their tax treatments), gained 5%.
Unusual success for biotechs
On Wednesday, KYTHERA Biopharmaceuticals (KYTH) and Intercept
Pharmaceuticals (ICPT) became the first biotechs to price above
the midpoint of their respective ranges since Affymax in 2006.
Both also traded up strongly on the first day (ICPT +29%, KYTH
+24%), producing the highest first-day returns for biotechs in
2012. KYTHERA, which treats submental fat, benefits from a
lucrative partnership with Bayer. Intercept Pharmaceuticals
targets chronic liver diseases that affect millions and have few
Remaining deals see weak trading
The first two deals of the week, Indian rice distributor Amira
Nature Foods (
) and camera chip provider Ambarella (AMBA), both priced below
the range, continuing a long stretch of pricing pressure. (From
July 25 to October 9, 71% of deals priced below the midpoint.)
Oil and natural gas E&P Diamondback Energy (FANG) also priced
below the midpoint on Thursday. All three deals performed poorly:
Ambarella and Diamondback had very small gains, while Amira
finished the week down 17% from its offer price as US investors
showed no signs of embracing risky emerging-market IPOs.
US IPO pipeline shrinks as zero deals added
The large amount of pricing activity has reduced the
US IPO pipeline
to 132 companies looking to raise an estimated $39.9 billion. Of
these, 49 companies have updated their filings within the past 90
days. No companies were added to the pipeline during the week.
US IPO market performance update
The week's strong deals allowed for a continuation of this year's
generally impressive IPO performance.
US IPOs from the past 90 days
have produced an average total return of 22% and an average
aftermarket return of 8%. Of these 41 deals, 35 (85%) are trading
above their offer prices. Year to date, the average total return
has been 18% and the average aftermarket return has been 4%.
There have been 114 deals in 2012, 19% more than at this point
last year, and the total proceeds of $39.4 billion are up 35%