The performance of the global IPO market over the past month has provided a first-class example as to why resiliency is one of the many attractive qualities of IPOs. After an abysmal third quarter showing, the global IPO market continues to bounce back as IPOs are considerably outperforming applicable benchmarks. The FTSE Renaissance Global IPO Index is up 8.4% this week alone, bringing its monthly return to 15.2% (compared to the MSCI All World Country Index; up 13.2% monthly).
While the global IPO market is outperforming benchmarks, certain regions noticeably stand out. New issues in Hong Kong had an astounding week as the FTSE Renaissance Hong Kong/China Top IPO Index posted gains just short of 19%, bringing its monthly return to 21.8% (Hang Seng +11.1% this week, +13.8% this month). Of the top ten performing global IPOs this week, a region-leading six of them are from Asia.
Issuance in the United States has certainly picked up in October. The two domestic companies to go public this month have received a warm welcome from investors. Wireless solutions provider Ubiquiti Networks (UBNT), debuted on October 14th and is up an additional 4.2% this week and is trading at nearly 36% above its offer price. Health care company ZELTIQ Aesthetics (ZLTQ), which markets the fat reducing CoolSculpting system, is also still up 13.6% from its October 19th offer price of $13. Furthermore, the US IPO calendar is quietly filling up as we are expecting five deals to price over the next two weeks. Other notable offerings to take place in foreign markets have been Saudi Arabia's Hail Cement (+4.9% since IPO) and Hong Kong's CITIC Securities (+19.3%). Issuance in the Asian markets is also very hopeful as the region has more than $5 billion in pricings slated for the coming month.
Weekly Winners
The technology sector is coming back with a vengeance. Following a famishing third quarter, tech IPOs are making an admirable attempt at erasing their losses. Led by companies such as Magnachip Semiconductor and NetQin Mobile (+25.6% and +14.2% respectively this week), tech IPOs worldwide have averaged nearly 8% gains this week (MSCI ACWI; 5.1%). Out of the 29 tech stocks to debut globally in 2011, a whopping majority 22 of them have traded up this week. Although they are off to a great 4Q start, the climb back to their break-even point is steep as Tech IPOs are still down nearly 22% year-to-date.
Speaking of tech IPOs, perhaps no recent IPO has been a bigger winner this week than US-based data-storage company Fusion-io (FIO), which offers its own storage memory platform that boosts data access speeds. After reporting solid earnings earlier this month, Fusion-IO's shares jumped on Monday after edging out technology powerhouses Apple, Oracle, and eBay for the honor of Barron’s 2012 Top Technology Pick. Fusion-io went public on June 9th of this year and has not looked back. The stock has soared 28.2% since last Friday and has exploded this month, trading up 78.6%.
Weekly Losers
It seems that Latin American IPOs weren't invited to the global equity rebound party. Countries that had promising starts to the year are simply not coming back with the same momentum as the rest of the global market. Brazil, Mexico, and Chile are only up a marginal 4.2%, 1.2%, and 2.3% respectively this week after combining to raise over $6 billion in the first half of the year. After listing fifteen new issues in the first two quarters of 2011, Latin American countries have combined for three IPOs since June 30 and zero in the since late July.
Optical components producer Fabrinet (FN) is likely glad that their particularly unfortunate week has come to an end. The British Virgin Islands-based company's tough week began with Mother Nature dealing it a brutal blow as rampant flooding in Thailand caused the company to suspend production at two of its facilities in the region. Following the factory closings, news broke that Fabrinet had received rating downgrades from Stifel Nicolaus and Morgan Stanley, causing the stock to tumble 20.3% this week. Fabrinet is down 40.3% year-to-date after its share price has fallen more than 30% this month.
The Week to Come: Groupon Madness!
Wait... Groupon is holding an IPO?
After months of media coverage, the super publicized, heavily scrutinized Groupon IPO is finally here. The company is planning to raise $510 million by listing shares on the NASDAQ next week in what is expected to be the second largest US-based internet IPO since 2001 in terms of proceeds raised (Google is first). Groupon is sure to dominate the IPO headlines next week; however it is not the only deal set to price. Rentech Nitrogen Partners (RNF) and Enduro Royalty Trust (NDRO) are also both expected to list next week, followed by Imperva (IMPV) and NewLink Genetics (NLNK) the week after.
With the VIX dropping comfortably below 30 on Thursday and European leaders taking a step in the right direction this week to calm the European Debt Crisis, more deals are expected to launch in the weeks ahead. Be sure to keep an eye on the Renaissance Capital IPO calendar for any upcoming developments.
Note: All return data is accurate as of 4PM EST on October 28th, 2011.
