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November 15, 2006

IPO Market : Lots of Hot Tech Deals

posted by MR WAVETHEORY at 11/15/2006 03:15:00 AM
Even Smeagol from Lord of the Rings is hot on IPOs.

Recently, there have been lots of IPOs. Some of them have performed well, a recent example being eFuture Information Technology Inc. (Nasdaq EFUT , Best IPO of 2006), but I can point to a few deals that have priced below their range. A few underwriters have even had to cut back deal size to get IPOs done. To get an idea of the current IPO market and exit environment, I looked at the IPOs that have been completed in the last 60 days and here are some interesting tidbits.

  • In the last 60 days, there have been 50 IPOs. 38 of them have generated positive returns. Only 12 of them have generated negative returns. So, by and large, IPOs appear to be fairly priced. The two worst performing IPOs are both satellite stocks: Globalstar and Orbcomm.
Negative Return IPOs (Last 60 days)
Company Name Symbol Date Underwriter Price Range IPO Price Current Price Return
Eagle Rock Energy Partners LP EROC 10/25/2006 UBS Investment Bank $19.00-$21.00 $19.00 $18.75 -1.30%
Ultrapetrol Bahamas ULTR 10/13/2006 UBS Investment Bank $13.00-$15.00 $11.00 $10.86 -1.30%
Ivivi Technologies II 10/19/2006 Maxim Group LLC $6.00-$8.00 $6.00 $5.91 -1.50%
Danaos Corporation DAC 10/6/2006 Merrill Lynch $20.00-$22.00 $21.00 $20.20 -3.80%
Thermage THRM 11/10/2006 Merrill Lynch $11.00-$13.00 $7.00 $6.65 -5.00%
Porter Bancorp PBIB 9/22/2006 Sandler O'Neill $23.00-$26.00 $24.00 $22.20 -7.50%
Home Diagnostics HDIX 9/21/2006 J.P. Morgan $14.00-$16.00 $12.00 $11.00 -8.30%
Warner Chilcott Limited WCRX 9/21/2006 Goldman Sachs $17.00-$19.00 $15.00 $13.06 -12.90%
LeMaitre Vascular LMAT 10/19/2006 Goldman Sachs $8.00-$10.00 $7.00 $5.99 -14.40%
Globalstar GSAT 11/2/2006 Wachovia Securities $16.00-$18.00 $17.00 $13.51 -20.50%
ORBCOMM ORBC 11/3/2006 UBS Investment Bank $12.00-$14.00 $11.00 $7.05 -35.90%

  • 14 IPOs priced below the range of their expected offering price. Of those 14 IPOs, half of them were biotech and pharmaceutical related companies. It seems that there is a concentration of weakness in pharma and biotech deals. Adding to the weakness in the sector is another IPO which I will add to the list below: Emergent Biosolutions Inc. (NYSE EBS) priced at $13 today which is below the range of $14-16.
IPOs that Priced Below the Range (Last 60 Days)
Company Name Symbol Date Underwriter Price Range IPO Price Current Price Return
ACA Capital Holdings ACA 11/10/2006 Credit Suisse $15.00-$17.00 $13.00 $13.01 0.10%
Catalyst Pharmaceutical Partners CPRX 11/8/2006 First Albany $11.00-$13.00 $6.00 $6.03 0.50%
Innophos Holdings IPHS 11/2/2006 Credit Suisse $14.00-$16.00 $12.00 $14.06 17.20%
Achillion Pharmaceuticals ACHN 10/26/2006 Cowen & Company $14.00-$16.00 $11.50 $13.75 19.60%
Cadence Pharmaceuticals CADX 10/25/2006 Merrill Lynch $11.00-$13.00 $9.00 $11.01 22.30%
Thermage THRM 11/10/2006 Merrill Lynch $11.00-$13.00 $7.00 $6.65 -5.00%
Home Diagnostics HDIX 9/21/2006 J.P. Morgan $14.00-$16.00 $12.00 $11.00 -8.30%
Warner Chilcott Limited WCRX 9/21/2006 Goldman Sachs $17.00-$19.00 $15.00 $13.06 -12.90%
BreitBurn Energy Partners BBEP 10/4/2006 RBC Capital Markets $19.00-$21.00 $18.50 $19.66 6.30%
Omni Financial Services OFSI 9/29/2006 Sandler O'Neill $10.00-$12.00 $9.50 $10.30 8.40%
CBRE Realty Finance CBF 9/28/2006 Credit Suisse $15.00-$17.00 $14.50 $15.93 9.90%
LeMaitre Vascular LMAT 10/19/2006 Goldman Sachs $8.00-$10.00 $7.00 $5.99 -14.40%
ICF International ICFI 9/28/2006 UBS Investment Bank $14.00-$16.00 $12.00 $16.70 39.20%
ORBCOMM ORBC 11/3/2006 UBS Investment Bank $12.00-$14.00 $11.00 $7.05 -35.90%
  • The top 10 deals returned an average of 143%. Of the top 10 deals, 7 were tech deals. Tech appears to be very strong. The top 10 deals are the following. There is a good representation of dot-com deals like ShutterFly and DivX, networking deals like Acme Packet, as well as medical deals like eHealth and Mindray Medical.
The Top 10 IPOs (Last 60 Days)
Company Name Symbol Date Underwriter Price Range IPO Price Current Price Return
eFuture Information Technology Inc. EFUT 11/1/2006 Anderson & Strudwick, Inc. NA $6.00 $43.60 626.67%
Riverbed Technology RVBD 9/21/2006 Goldman Sachs $7.00-$8.50 $9.75 $28.23 189.50%
Home Inns & Hotels Management HMIN 10/26/2006 Credit Suisse $10.00-$12.00 $13.80 $28.30 105.10%
eHealth EHTH 10/13/2006 Morgan Stanley $10.00-$12.00 $14.00 $25.90 85.00%
DivX, Inc. DIVX 9/22/2006 J.P. Morgan $12.00-$14.00 $16.00 $28.99 81.20%
Mindray Medical International MR 9/26/2006 Goldman Sachs $10.00-$12.00 $13.50 $21.21 57.10%
Acme Packet APKT 10/13/2006 Goldman Sachs $6.50-$7.50 $9.50 $14.40 51.60%
ExlService Holdings EXLS 10/20/2006 Citigroup $10.00-$12.00 $13.50 $20.19 49.60%
Bare Escentuals BARE 9/29/2006 Goldman Sachs $15.00-$17.00 $22.00 $32.29 46.80%
ICF International ICFI 9/28/2006 UBS Investment Bank $14.00-$16.00 $12.00 $16.70 39.20%

By the looks of it, tech is back. Investors are buying tech deals.

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