In the year’s final week, bankers showed they had learned the lesson – maybe. Three out of the four planned offerings were cut sharply in size, got priced and did not tank in the aftermarket. The other deal never made it out the door.
Here’s the trio that went public last week:
- Cobalt International Energy (NYSE: CIE) priced 63 million shares at $13.50 each to raise $850.5 million. The underwriting fees and commissions amounted to $36.6 million. The deal was priced below its filing range of $15 to $19 per share. The IPO opened Wednesday morning at $13.25 and closed Friday at $13.50, UNCHANGED from its initial offering price.
- Team Health Holdings (NYSE: TMH) priced 13.3 million shares at $12 each to raise $159.6 million. The underwriting fees and commissions amounted to $9.6 million. The deal was priced well below its filing range of 20 million shares at $14 to $16 each. The IPO opened Wednesday morning at $12 and closed Friday at $13.18, UP 9.83 percent from its initial offering price.
- Kraton Performance Polymers (NYSE: KRA) priced 10.3 million shares at $13.50 each to raise $138.9 million. The underwriting fees and commissions amounted to $12.6 million. The deal was priced below its filing range of $16 to $18 per share. The IPO opened Thursday morning at $13.50 and close Friday at $13.60, UP 0.7 percent from its initial offering price.
Not a Prime Cut
The “no show” was scheduled to make its debut on Friday morning. It didn’t.
- National Beef (NYSE: NBP – proposed) was expected to price its IPO of 17.3 million shares at $14 to $16 each to raise $276 million. The financial media reported the deal had been postponed due to “current weakness in the IPO market.” What they really meant was, “There is no way this deal is getting out the door at this price range.” And the message from the company and its bankers was clear: “We’re not cutting it.”
Despite National Beef’s sub-prime showing, the IPO market delivered some decent goods to those with realistic expectations.
In the end, for the three deals that did get done, almost everybody got something: Issuers raised capital ($1.149 billion), the bankers got paid ($388.2 million – remember, getting paid is what it’s all about) and significantly, investors did not get burned.
The rap against bankers since Labor Day has been that they priced their IPOs too high and consequently, many of the deals floundered. The figures back up that complaint. Consider the following: From Labor Day 2009 going back to 2006, here are the numbers, according to U.S. Securities and Exchange Commission filings:
- 2009 (pre-Labor Day): 21 IPOs were priced with an average opening-day gain of 12.9%.
- 2009 (post-Labor Day): 41 IPOs were priced with an average opening-day gain of 5.72%.
- 2008: 32 IPOs were priced with an average opening-day gain of 9.38%.
- 2007: 212 IPOs were priced with an average opening-day gain of 15.3%.
- 2006: 201 IPOs were priced with an average opening-day gain of 13.5%.
Let’s hope the bankers will listen to old Ben Franklin during the coming year and get their IPOs priced right.
The IPO Buzz will not be published next week, but will resume on January 4, 2010.
Happy Holiday everybody!
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.