The IPO Buzz: Ferrari and the Road to Recovery

This week’s calendar has seven IPOs expected to raise about $1.5 billion. The focus is on one. It is Ferrari (RACE – proposed), the Italian luxury sports car manufacturer. Here is the buzz:

  • Monday, the books close.
  • Tuesday, it is to be priced.
  • Wednesday, it starts trading on The New York Stock Exchange.

That pretty much says it all.

The sex appeal of a Ferrari is in contrast to the speed bumps encountered in the IPO market over the past eight weeks.

Volatility in the U.S. stock market – struggling to escape the grasp of a correction – is not the breeding ground for a robust IPO calendar. We have witnessed this since Aug. 25, the day the major U.S. stock indexes closed at their 2015 lows. After that, the new-issue traffic dried up. Just 14 deals have been priced since Labor Day, excluding six unit offerings, and 11 of the 14 had to be cut in size to meet limited investors’ demand.

But this week, the sparkle could return to the IPO market.

Prospecting for Gold

Before we get into this week, let’s pan for some gold in last week’s market.

The major stock market indexes closed for the third straight week in the plus column and within striking distance of crawling over the correction fence. In past years, some believed a 10 percent recovery from recent lows was what it took to reverse a correction. Based upon the close on Friday, Oct. 16, the Dow Jones Industrial Average was within 18 points of a recovery, the S&P 500 within 21 points and the NASDAQ Composite Index within 71 points.

One other nugget of gold popped up last week. It was the brisk traffic at the U.S. Securities and Exchange Commission’s filing window. Last week, 12 companies filed plans to go public. Among them were two big names: Square (SQ – proposed), the mobile payments company popular with car services and small businesses, and Match Group (MTCH – proposed), the online dating company that runs, OKCupid and Tinder plus other Internet and mobile dating subscription services.

So what’s the big deal about last week’s dozen? That raised the mid-October 2015 total to 24 new filings. Worth noting: That matched the total for mid-October 2014. It, too, amounted to 24 new filings. Over the last decade, the busiest mid-October was in 2013 with 27 new filings. Is there a message there? If the past is any indication of the future, which it isn’t, we might be in for a good year-end run in the IPO market, depending upon market conditions.

An Autumn Chill

Now back to the present.

Last week’s IPO market was largely forgettable. Of 10 IPOs on that calendar, only five got out the door. One was sharply reduced in size. First Data (FDC) offered 160 million shares at $16 each to raise $2.56 billion, DOWN from 160 million shares at $18 to $20 each to raise $3 billion. Its IPO struggled in the aftermarket. Three other deals were unit offerings. The fifth was an American Depositary Shares deal representing ordinary shares already traded on a foreign stock exchange. Of the remaining deals, one was postponed and the rest were pushed into this week.

Built for Speed

As far as this week is concerned, there are three new faces on the IPO calendar. The most famous one is Ferrari, a brand built for speed (200-plus mph). The other newcomers are a gene therapy company and a manufacturer of specialty packaging for products ranging from cosmetics and liquor to prescription drugs.

Ferrari, based in Maranello, Italy, is one of the world’s leading luxury brands and among the world’s most recognizable luxury performance sports cars. Founded in 1929, the company has about 2,922 employees. Bankers expect to offer 17.2 million shares at $48 to $52 each to raise $858.8 million on Tuesday evening. The shares are expected to trade on The New York Stock Exchange on Wednesday morning, Oct. 21, 2015.

Dimension Therapeutics (DMTX – proposed), based in Cambridge, Massachusetts, is a gene therapy platform company focused on discovering and developing new therapeutic products to treat people living with rare diseases associated with the liver and caused by genetic mutations. Founded in 2013, the company has about 49 employees. Bankers expect to offer 5.5 million shares at $14 to $16 each to raise $82.5 million on Wednesday evening. The shares are expected to trade on the NASDAQ Global Market on Thursday morning, Oct. 22, 2015.

(For more information, please click here: Dimension Therapeutics)

Multi Packaging Solutions International (MPSX – proposed), based in New York City, is a provider of value-added specialty packaging solutions focused on high complexity products for the consumer, health-care and multimedia markets. Founded in 2005, the company has about 8,900 employees. Bankers expect to offer 18.8 million shares at $15 to $17 each to raise $340.8 million on Wednesday evening. The shares are expected to trade on The New York Stock Exchange on Thursday morning, Oct. 22, 2015.

(For more information, please click here: Multi Packaging Solutions International)At press time, next week’s calendar is clean and green – nothing. But it is early – and anything can happen.

Stay tuned.

Disclosure: Neither the author nor anyone else on the staff has a position in any stocks mentioned, nor do we trade or invest in IPOs. The author and staff do not issue advice, recommendations or opinions.