The IPO Buzz: Chinese Lightning

The buzz was that SouFun Holdings Limited (SFUN), an operator of an Internet real estate portal in China, was a “hot issue.” Bankers confirmed the chatter when they accelerated the deal and priced it on Thursday, Sept. 16, rather than wait until Monday, Sept. 20, as originally planned.
SouFun priced 2.9 million American Depositary Shares at $42.50 each. The IPO opened on Friday morning at $67 per share, sold as high as $74, dropped as low as $63.01 and closed at $73.50 for a gain of $31 per share from its initial offering price.
But this fall’s IPO pot started bubbling earlier in the past week.
On Friday, Sept. 10 the IPO calendar listed two deals for the week of Sept. 20 (one being SouFun). They were expected to raise $185 million and nothing was scheduled for the week of Sept. 27. That’s right – zip.
Fast forward a week to the current IPO calendar.
It lists three deals for the week of Sept. 20, including a REIT carried over from August. They are expected to raise $495 million. And six deals are now scheduled for the week of Sept. 27. They are expected to raise $2.1 billion.
What’s the secret ingredient in this bubbling IPO soup? Three of those six IPOs are from China. But more on this year’s Chinese IPOs next week.
On a Quest
SciQuest (SQI – proposed) looks to be the “pick of the week” based on a consensus taken from investment professionals.
The company offers on-demand software aimed at reducing costs and used to monitor spending for procurement of goods and services from suppliers. SciQuest has about 165 customers, which compete in higher education, life sciences, and healthcare industries and in state and local governments. SciQuest’s customers are located in 16 countries.
For the six months ending June 30, 2010, SciQuest reported net income of $1.8 million on revenues of $20.7 million, compared with net income of $476,000 on revenues of $13.7 million for the same period a year ago.
SciQuest’s industrial index, the Dow Jones U.S. Software & Computer Services Index (DJUSSV), has been a laggard in this year’s stock market. The Index closed on Friday, Sept. 17, at 686.59, DOWN 3.78 percent from 713.56, its close on Dec. 31, 2009.
In comparison, the Nasdaq Composite Index closed on Friday at 2,315.61, UP 2.05 percent for the year from 2,269.15, its close on Dec. 31, 2009.
SciQuest plans to price 6 million shares at $9.50 to $11.50 each to raise $63 million. The IPO is to start trading on Friday, Sept. 24.
Then it’s on to next week and the Chinese-laden IPO calendar.
Disclosure: Neither the author nor anyone else on the staff has a position in any stocks mentioned, nor do they trade or invest in IPOs. The author and staff do not issue advice, recommendations or opinions.