The IPO Buzz: Billion-Dollar Babies Redux

HCA Holdings (HCA – proposed), the Nashville-based healthcare provider, was widely reported that it planned to price its IPO on Wednesday, March 9, to trade on Thursday, March 10, at a price range of $27 to $30 per share.
 
Note: No sources were on record.
 
Here’s what we know.
 
On Dec. 22, 2010, HCA filed for an IPO to raise $4.6 billion. As of Friday’s close, Feb. 18, there were no amended S-/1 filings at the U.S. Securities and Exchange Commission’s window. The size remained at $4.6 billion – no number of shares – no price range.
 
And there’s more.
 
As late as Friday afternoon, HCA’s investment bankers reported they had – you guessed it – no pricing date for the deal.
 
This isn’t to say the press is wrong. If they are right, then maybe somebody leaked the information ahead of the filing.
 
However, there is one thing predictable about the IPO market. It is cyclical. And the current cycle features a parade of billion-dollar babies.
 
Over the last three months, three IPOs of $1 billion or more have come to market and raised over $30.3 billion. And the pipeline has a couple more. They expect to raise another $5.75 billion. That’s heavy traffic, considering last year’s IPO calendar raised $39.8 billion.
 
The first billion-dollar baby to make an appearance in the U.S. capital markets was the June 1998 Alstom SA (EPA: ALO) deal. The company offered 109.1 million shares at $34.22 each to raise $3.73 billion. It’s not an American company. It’s a French provider of transport and energy infrastructure.
 
Republic Services (RSG) was the first American IPO to raise a billion dollars or more. In July 1998, the company offered 55 million shares at $24 each to raise $1.32 billion.
 
In any event, the billion-dollar babies are rare birds in the United States. Since June 1998, bankers have priced 2,919 IPOs; only 79 of them were $1 billion or more in size. And of that number, 49 were U.S.-based companies, or 62 percent of the traffic.
 
The recent cycle started with the November 2010 General Motors (GM) IPO. GM offered 478 million shares at $33 each to raise $15.8 billion. The stock closed on Friday, Feb. 18 at $36.51, UP 10.6 percent from its initial offering price.
 
Note: Thomson/First Call reports 19 analysts cover General Motors. The median recommendation is a “Buy” with a $45 price target. That’s about 23.3 percent above Friday’s closed.
 
The other two were:
 
Nielsen Holdings (NLSN) offered 71.4 million shares at $23 each to raise $1.64 billion in January. The stock closed on Friday at $27.69 per share, UP 20.4 percent from its initial offering price.
 
Note: Thomson/First Call reports seven analysts cover Nielsen. The median recommendation is a “buy” with a $32 price target. That’s about 15.6 percent above Friday’s close.
 
Kinder Morgan (KMI) offered 95.5 million shares at $30 each to raise $2.86 billion earlier this month. The stock closed on Friday at $31.37 per share, UP 4.57 percent from its initial offering price.
 
Note: Thomson/First Call had no information on analysts’ estimates, recommendations or price target at press time.
 
The upshot over last week’s furor: A lot of wing flapping, but no flying.
 
 
Disclosure: Neither the author nor anyone else on the IPOScoop.com staff has a position in any stocks mentioned, nor do they trade or invest in IPOs. The author and IPOScoop.com staff do not issue advice, recommendations or opinions.