Tough week for IPOs, but three high growth tech companies debut next week
Even though four deals were completed, raising nearly $1.3
billion, it was a tough week for IPOs by 2012's lofty standards.
With a lack of strong secular growth stories, which have made for
the year's best-performing IPOs, the average first day return was
only 2%, compared to 17% for the year. Pricing pressure also
returned, as three deals priced below the midpoint, which may
have reflected a downturn for the market (the S&P is down 3%
and the Russell 2000 is down 4% for the month). Things should
brighten up quickly though, with
11 deals on the calendar
, including 3 high-growth tech companies. Encouragingly, the Vix
has remained below 25 all year, even dipping below 15 in recent
weeks, and the
FTSE Renaissance US IPO Index
(up 16%) continues to outperform the S&P 500 (up 9%),
indicating that money is flowing into newly public companies.
The week's top performer was Forum Energy Technologies (FET), an oil and gas products provider. It priced at the top of the range, raising $379 million, and is trading up 10%. Another energy industry supplier, MRC Global (MRC), raised even more ($477 million), but it priced at the low end of the range and is trading down 1%. Solar company BrightSource (BRSE) withdrew its $250 million IPO on Wednesday. Alternative energy IPOs have generally struggled this year, with several being postponed or delayed and others facing significant pricing pressure.
Oaktree Capital (OAK), an alternative asset manager with $75 billion in AUM, had a rough day on Wednesday: it raised 24% less than expected ($380 million) and one of its portfolio companies, Aleris Corporation (ARS), an aluminum products manufacturer, postponed a $500 million IPO. Erickson Air-Crane ( EAC ), which postponed its IPO in February, priced 43% below its original range and has stayed flat.
The tough market did not deter seven companies from setting terms this week. Three were fast growing software companies focused on enterprise data: Splunk (analysis; SPLK), Infoblox (data centers; BLOX) and Proofpoint (protection; PFPT) have grown by 90%, 27% and 26%, respectively, in their most recent quarters, and all three are set to price next week. Also setting terms were China Auto Rental (CARH), biotech Supernus (SUPN) and video processing vendor Envivio ( ENVI ), which postponed its IPO in June 2011.