Weekly recap: Bright Horizons shines, six US IPOs set terms

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Child care provider Bright Horizons' ( BFAM ) 29% first-day gain topped another positive week in the US IPO market . Both Bright Horizons and diagnostics company LipoScience ( LPDX ) priced and traded up, while six more companies set terms to raise a total of $1.2 billion. All seven deals scheduled so far this year have priced, and if the trend continues with this week's five deals, it will be the second most active January of the past decade (trailing only January 2006's IPO deal count of 15). 

Two deals gain more than 15%, but pricings reflect investor selectiveness
Bright Horizons, the largest provider of employer-sponsored child care with over $1 billion in sales, raised $222 million by pricing $1 above the range. The company has an 11-year history of revenue growth and EBITDA margin expansion, and the stock had a 17% annual return from 1997 until 2008, when the company was taken private by Bain Capital in a $1.3 billion LBO. On Friday, the stock closed at $28 for a first-day pop of 29%, just shy of Norwegian Cruise Line's ( NCLH ) 30% first-day gain on January 18.

LipoScience, which provides a diagnostic test to assess cardiovascular disease risk, priced at $9, below the $13-$15 range. The company has doubled its sales to $54 million since it first tried to go public in 2002, but investor pushback on price likely stemmed from the company's recent sales growth deceleration, forecasted lack of profitability and a near-term business transition. With the large pricing discount, the company raised $45 million, and the stock closed at $10.45, up 16% on its first day of trading on Friday.

Six deals add $1 billion the IPO calendar
QGOG Constellation ( QGOG ), which drills for oil and natural gas offshore in Brazil, set terms for a $550 million IPO, which would be the first US IPO from Brazil since Banco Santander Brasil's $4 billion IPO in 2009. The company derived more than 90% of its $747 million in sales over the last twelve months from Petrobas ( PZE ). Another foreign company, National Commercial Bank Jamaica (NCJ), Jamaica's largest commercial bank, set terms for a $225 million IPO.

The third largest new deal, for $200 million, came from Boise Cascade Company (BCC), a building materials and forest products provider. Private equity firm Madison Dearborn acquired Boise Cascade for $3.7 billion in 2004. After an unsuccessful IPO attempt in 2005, Madison Dearborn sold the paper, packaging and newsprint segments to a blank check company (otherwise known as a SPAC), which now operates as Boise Inc. (BZ), for $1.6 billion. Boise Cascade, which is also backed by OfficeMax (OMX), booked $2.6 billion in sales over the last twelve months. Housing plays have performed well recently, with real estate brokerage company Realogy (RLGY) and online real estate marketplace Trulia (TRLA) up 65% and 50%, respectively, from their offer prices. TRI Pointe Homes (TPH), a homebuilder in California, is scheduled to price its IPO this week, at a time when housing sales are at multi-year highs.

Health Insurance Innovations (HIIQ), which offers medical insurance to the uninsured and underinsured, and AutoGenomics (AGMX), a molecular diagnostics system provider, set terms for $70 million and $60 million IPOs, respectively. A sixth company, 3D printing company ExOne (XONE), set terms early on Monday for a $75 million IPO. All three companies are small (under $50 million in sales) with proposed market capitalizations under $200 million.

AutoTrader.com withdraws its IPO filing
No companies were added to the US IPO pipeline last week, while AutoTrader Group (ATG), which operates the largest digital automotive marketplace, withdrew a $300 million IPO. With four days left, January has seen only six initial filings, which would be a post-JOBS Act monthly low. The US IPO pipeline decreased slightly to 114 companies looking to raise $32.4 billion. The active pipeline (updated within the past 90 days) contains 45 companies seeking $12.4 billion.

US IPO market performance
While all three MLP IPOs traded down last week, two bounced back this week, and all but one of the year's seven deals are now trading above their offer prices. The average total return for US IPOs from the past 90 days is an impressive 29% (vs. 25% a week ago), and the average aftermarket return is 16% (vs. 14%). Year to date, seven IPOs have raised $2.1 billion (vs. $0.2 billion at this point last year), with an average total return of 15% and an average aftermarket return of 3%.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: News Headlines , IPOs

Referenced Stocks: BFAM , LPDX , NCLH , PZE , QGOG

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