The IPO Buzz: Curtain’s Up for Fall

The drama in this fall’s show is in the big buildup of the IPO pipeline.

 

As of Friday, Sept. 10, the 2010 pipeline showed 174 IPOs in registration, according to the U.S. Securities and Exchange Commission’s filings. These deals are expected to raise $36.8 billion.

 

But first, let’s take a look at what has caught the financial media’s imagination. The financial press has been having a great time beating the drums over the pending General Motors IPO. They have been quoting unnamed sources and self-proclaimed IPO “gurus” that it could be the largest or second-largest U.S. IPO ever. As of now, that honor belongs to Visa (V). On March 18, 2008, Visa priced 406 million shares at $44 each, which raised $17.9 billion.

 

Until GM announces proposed pricing terms (number of shares and a price range) and how much each of its current stockholders plan to sell, we know nothing. What we do know: On Aug. 18, GM filed for an IPO to raise $100 million. No expected pricing date has been announced. The $100 million GM IPO was included in the 2010 IPO pipeline.

 

Now back to today’s pipeline. The numbers are dramatic when you look at the latest total compared with year-end 2009. At Friday’s close, there were 174 IPOs in the pipeline looking to raise $36.8 billion. That’s slightly more than twice the total at Dec. 31, 2009, where there were 85 IPOs in registration aiming to raise $18.8 billion.

 

Fast forward to last Friday.

 

Between last year’s carry-overs and this year’s new filings, the 2010 calendar has produced 92 IPOs and raised $13.5 billion.

 

That’s not bad.

 

Consider the stock market’s roller-coaster ride this year. The Nasdaq Composite Index, the barometer of the IPO market, closed on Dec. 31, 2009, at 2,269.15. It popped up to a year’s high of 2,530.15 on April 23, then flopped to a year’s low at 2,091.24 on July 2, and recovered to 2,242.48 at Friday’s close.

 

Before a single ticket is sold to a new Broadway play, the hype machine often kicks into high gear – especially if a Hollywood star is going to appear on stage somewhere along the Great White Way.

 

Wall Street operates on a similar principle.

 

Of the 174 deals now in the pipeline, 32 bankers have the primary position on the cover of the prospectuses – with their names being listed as the first name on the upper left-hand side. Once again, a handful of bankers continued to dominate the IPO traffic. No surprises here.

 

Seven bankers are the lead managers for 110 IPOs. In other words, 21.9 percent of the bankers expect to manage 63.2 percent of the deals in today’s IPO pipeline.

 

The totals run from a high of 25 IPOs for a single banker to one each for seven others. The heavy hitters are:

 

Goldman Sachs: 25 IPOs. Goldman Sachs expects to raise about $5.7 billion. The largest is Toys R US, the Wayne, New Jersey-based specialty retailer of toys and juvenile products. On May 28, the company filed for an IPO to raise $800 million. The other joint-lead managers are J.P. Morgan, BofA Merrill Lynch, Credit Suisse, Deutsche Bank Securities, Citi and Wells Fargo Securities.

 

BofA Merrill Lynch: 22 IPOs. BofA expects to raise about $9.6 billion. The largest is HCA, a Nashville-based operator of the largest non-governmental hospital in the United States. On May 7, the company filed for an IPO to raise $4.6 billion. The other joint-lead managers are Citi and J.P. Morgan.

 

J.P. Morgan: 20 IPOs. J.P. Morgan expects to raise about $6.1 billion. The largest is Nielsen Holdings N.V., a Netherland-based provider of global information on consumers and consumer behavior. On June 3, the company filed for an IPO to raise $2 billion. The other joint-lead manager is Morgan Stanley.

 

The pipeline includes a few deals whose names are already up in lights.

 

General Motors – yes, that General Motors, the one that helped turn Detroit into Motor City –- aka Motown -– and was once the biggest auto manufacturer in the world. (That was before it ran into some trouble and needed help from the federal government.) On Aug. 18, the company filed for an IPO to raise $100 million. The joint-lead managers are Morgan Stanley, J.P. Morgan, BofA Merrill Lynch and Citi

 

Skype S.A., a Luxemburg-based Internet communications provider. On Aug. 10, the company filed for an IPO to raise $75 million. The joint-lead managers are Goldman Sachs and J.P. Morgan and Morgan Stanley.

 

Zipcar, a Cambridge, Massachusetts-based operator of the world’s leading car-sharing network. On June 1, the company filed for an IPO to raise $75 million. The joint-lead managers are Goldman Sachs, J.P. Morgan and Morgan Stanley.

 

And the smallest deal in the IPO pipeline:

China Century Dragon Media, a China-based television advertising company. On May 14, the company filed for an IPO to price 2.5 million shares at $3 to $4 each to raise $8.75 million. The lead manager is WestPark Capital.

 

Any way you look at it, the fall of 2010 is shaping up to be an interesting time for the IPO market.