Nevertheless, there’s no question that the stock market’s latest sell-off has been sharp enough to be dubbed a “correction.” (The yardstick used to measure a correction is a decline of 10 percent or more from the previous high, while a “bear market” is a drop of 20 percent or more.) As of Friday’s close, all the major U.S. stock market indexes were down over 10 percent from their closing highs set on Oct. 9 or Oct. 10. But the slide that pulled the indexes down to a 10 percent decline started stumbling just two days after Christmas — on Dec. 27, to be exact. Anyone whose memory hasn’t been fogged by too much eggnog will recall that Wall Street did enjoy a brief Santa Claus rally just before this sell-off began.
A hedge fund manager, who asked not to be identified, said there will always be an IPO market.
“People need money,” he said. “In good times, deals get overpriced. In bad times, deals get discounted.”
So let’s not be too hasty to close the books on 2008’s IPO market before it’s even begun. Yes, Virginia, there are some indications that 2008 is shaping up well:
During this year’s first two weeks, 14 companies filed plans to go public, according to U.S. Securities and Exchange Commission records. They were looking to raise $2.4 billion.
And now for a little perspective — during the first two weeks of the previous five years collectively from 2003 through 2007, a total of 16 companies filed plans to go public. They were hoping to raise $3.5 billion.
(Please see new channel: IPOs Just Filed)
Here is something worth noting. This year’s filings exclude:
- ReneSol, a Chinese manufacturer of solar wafers, which some call an IPO. Its shares are traded on the Alternative Investment Market of the London Stock Exchange at about £4.28, or about US$8.37 per share. (i.e. – you can buy all you want on the AIM ahead of the U.S. offering.)
- Valor Computerized Systems, an Israeli-based provider of software solutions for printed circuit boards, which some call an IPO. Its shares are traded on the Frankfurt Stock Exchange at about Euro 3.51, or $5.17 per share. (i.e. – you can buy all you want on the FSE ahead of the U.S. offering.)
The above are not IPOs; they are secondary offerings.
From Tulsa to El Paso
This brings us to the new-issues calendar.
By Friday’s close, bankers had 11 IPOs on the calendar for January. That was up from three deals this time a week ago.
This week, bankers plan to price six IPOs. They expect to raise $936.3 million. To give an idea just how the calendar started building, on Wednesday, Jan. 9, this week’s favorite -– Williams Pipeline Partners L.P. (NYSE: WMZ proposed) — was not on the calendar.
Here’s what the deal is about.
Williams Pipeline Partners is a Tulsa, Oklahoma-based limited partnership that was recently formed by The Williams Companies (NYSE: WMB) to own and operate natural gas transportation and storage assets. Bankers plan to price 16.25 million common units at $19 to $21 each on Thursday evening, Jan. 17, to trade on Friday, Jan. 18.
Here’s why people are looking at the Williams Pipeline deal.
It is El Paso Pipeline Partners, L.P. (NYSE: EPB), an IPO priced on Nov. 15, 2007. El Paso Pipeline Partners was formed by El Paso Corporation (NYSE: EP) to own and operate natural gas transportation pipelines, storage and other midstream assets. Bankers priced 25 million common units at $20 each. The common units closed Friday, Jan. 11, 2008, at $24.15, UP 20.8 percent from its initial offering price.
The 2008 IPO market is opening within the framework of past years. Consider the following:
- 2007: One deal was priced Jan. 11 to open the year.
- 2006: One deal was priced Jan. 12 to start the year.
- 2005: Three deals were priced Jan. 20 to begin the year.