The IPO calendar produced 30 deals in this year’s first quarter, according to U.S. Securities and Exchange Commission filings. That’s up from two IPOs in last year’s first quarter. That’s right -– just two IPOs a year ago.
There’s more to the story.
The lifeblood of the IPO market is its pipeline – the companies that have filed plans to go public and are waiting a turn on the calendar. There’s a startling contrast between the first quarter of 2010 and the first quarter of 2009.
For the 12 months ending March 31, 2010, about 186 companies were in the IPO pipeline. They expect to raise about $39.3 billion.
Hit “rewind” to a year ago. For the 12 months ending March 31, 2009, about 73 companies were in the IPO pipeline. They expected to raise about $18.4 billion.
And there’s more.
Average Annual Traffic
Over the last three decades from 1980 through 2009, the IPO calendar priced 11,333 deals for an average of 377 new issues per year.
Over the last decade from 2000 through 2009, the IPO calendar priced 1,807 deals for an average of 181 new issues per year.
Last year -– 2009 — the IPO calendar priced just 61 deals.
To repeat, just for perspective, in the first quarter of 2009, the IPO calendar produced only two deals.
Preparing the Ground
Turning our attention back to this year, it’s anyone’s guess how 2010 will turn out. Once again, in the first quarter alone, the IPO calendar produced 30 deals – or 15 times the output in the year-ago quarter. That’s an encouraging trend.
With a stable stock market, things could get busy for Wall Street’s investment bankers.
The market’s rally from multiyear closing lows of March 9, 2009, has created fertile ground for a rebound this year in the IPO market. To put it in context, the Nasdaq Composite Index –- the barometer of the IPO market — is up 89 percent from its March 2009 bottom. Since then, the Dow Jones industrial average is up 67 percent, and the Standard & Poor’s 500 Index is up 74 percent from that bottom.
For the year, the Dow is up 4.79 percent, while the S&P 500 is up 5.65 percent and the Nasdaq is up 5.88 percent.
Of course, the big question is: “What’s in?” Once again, let’s turn to the numbers.
Over the last 12 months, the technology sector priced 20 deals. As of Thursday’s close, 16 were winners and four were losers. (The stock market was closed for Good Friday.)
The average gain for the tech group was 24.1 percent. The tech sector has outperformed the IPO graduating class of the last 12 months.
The Last 12 Months
Over the past year, the IPO calendar has priced 85 deals (excluding four unit offerings consisting of common stock and warrants). As of Thursday’s close, 56 were winners and 29 were losers. The average gain for the group was 12.9 percent.
Over the last 12 months, the financial sector priced 20 deals. As of Thursday’s close, 11 were winners and nine were losers. The average gain for the group was 6.4 percent.
The sector with the most IPOs in the pipeline is –- you guessed it – technology, with 34 deals. Finance is not too far behind — with 30 deals.
But their respective aftermarket performance is the oil that lubricates the hinges of the door to the IPO calendar.
The Week Ahead
This week the IPO calendar lists four deals and yes, one is technology-related. It is Nexsan (NXSN – proposed).
Nexsan is a Thousand Oaks, California-based provider of disk-based storage systems designed for long-term storage of digital information such as medical images, email or business documents.
If you look at the company’s numbers, it might appear that net income and revenues have flattened out over the last two years.
For the year ending June 30, 2009, Nexsan reported net income of $3.5 million on revenues of $60.9 million, compared with a net loss of $5.3 million on revenues of $62.7 million for the same period a year ago.
For the six months ending Dec. 31, 2009, Nexsan reported net income of $497,000 on revenues of $34.3 million, compared with net income of $2.8 million on revenues of $32.5 million for the same period a year ago.
As of Dec. 31, 2009, Nexsan reported an accumulated deficit of $34.1 million.
On Wednesday, Nexsan plans to price 5 million shares at $10 to $12 each to raise about $55 million. The company plans to offer about 4.88 million shares and selling shareholders expect to offer about 116,000 shares. The IPO is to start trading on Thursday, April 8, 2010.
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.