For all the positive headlines (the Facebook announcement, the jobs report, the market rally), the end of January was a mixed bag for the US IPO market. The FTSE Renaissance US IPO Index (IPOS), up 15.4% year-to-date, maintained its stellar start to the year, suggesting investors are interested in IPOs, but some companies struggled with pricings, indicating that they remain selective. As evidenced by health care software provider Greenway Medical Technologies (GWAY), trading up 32% since pricing last week, investors do remain attracted to companies positioned well in growing markets. But so far this year, four of twelve scheduled pricings have been postponed, and only one company has priced above the midpoint of its proposed range.
Pricing Activity
The energy industry was the main source of pricing activity last week. Two energy companies, Dynamic Offshore Resources (DOR) and Platinum Energy Solutions (FRAC), postponed, while two others, Matador Resources (MTDR) and U.S. Silica (SLCA), were down 2% and 5%, respectively, after the first day of trading. All four companies are exposed to the decline in natural gas prices, which has prompted some leading players (e.g. Chesapeake Energy) to cut back on capital expenditures. The biotech space remains challenged, despite the success of Verastem (VSTM), which increased its deal size and is up 10% since its IPO. Biotech Merrimack Pharmaceuticals (MACK) postponed its deal on Wednesday; Cempra (CEMP) priced 50% below its proposed midpoint and gained 1% in its first day of trading. Internet security provider AVG Technologies (AVG) also had a weak showing. It priced at the bottom of its range and traded down 19% on its first day. As mentioned, the one bright spot was Greenway. Although it priced at $10, slightly below its range, it raised $67 million and is now trading above the range, up 32% from its offer price.
Filing Activity
There were four companies that filed for IPOs last week. Skin treatment provider Tria Beauty (TRIA) was the 17th (and last) company to file in January, bringing the month into a two-way tie for the most January filings since 2000. Facebook (FB) was the second to file, on Wednesday, followed by coal producer Foresight Energy Partners (FELP) on Thursday. On Friday, Enerkem (NRKM), which converts municipal waste into biofuels, filed for a $125 million IPO.
Upcoming Reports
This week, several high profile Internet companies with recent IPOs will report results. Jive Software (JIVE), trading up 42% from its offer price, and Groupon (GRPN), up 24%, will release financials for the first time since their IPOs after the market closes on Tuesday and Wednesday, respectively. LinkedIn (LNKD), up 78%, and Imperva (IMPV), up 83%, will be reporting results on Thursday, post close. Zynga (ZNGA), which only began trading above its offer price on January 27th, but is now up 34%, is scheduled to report next week.
