The IPO Buzz: June’s Busting Out

Note: An industrial sector needs a winner to open the IPO window for others in its sector to go public. And a big winner is helpful. China has done this in the U.S. capital markets. It was (Nasdaq: CYOU), an online game provider in China. It priced its IPO of 7.5 million shares at $16 each on April 1, 2009, and the IPO closed June 12 at $41.45, UP 159.1 percent from its initial offering price.
As of Friday’s close, this was the sharpest percentage gain for an IPO priced over the last 22 months. You have to reach back to Aug. 2, 2007, to find a better IPO aftermarket performer. It was Concho Resources (NYSE: CXO), an independent oil and natural gas producer based in Midland, Texas.
Concho priced its IPO of 20.9 million shares at $11.50 each on Aug. 2, 2007; the stock closed Friday, June 12, 2009, at $32.21, UP 180.1 percent from its initial offering price.
The Chinese Sector
The two Chinese IPOs on the calendar for the week of June 22 are: Chemspec International (NYSE: CPC – proposed), a Shanghai-based manufacturer of specialty chemicals, and Duoyuan Global Water (NYSE: DGW – proposed), a Beijing-based supplier of water treatment equipment. But more on each next week.
The buzz in the IPO market has been about Shanda Interactive Entertainment (Nasdaq: SNDA) and its plans to spin off its wholly owned Shanda Games as an IPO in the U.S.
Shanda Interactive is a Shanghai-based interactive entertainment media company and an operator of online games. Its stock has soared from a Jan. 15, 2009, low of $25.66 to Friday’s close of $57.43, UP 123.8 percent over the last five months — and now there’s another Shanda IPO is in the works.
On May 25, the PRNewswire-Asia reported that Shanda Interactive planned to file with the U.S. Securities and Exchange Commission for an initial public offering of its wholly owned Shanda Games. No size was given and no timetable announced.
Nevertheless, one news agency reported Shanda had, in fact, filed with the SEC and is looking to raise about US$80 million. The fact of the matter, by Friday, June 12’s close, there was no record of such a filing with the SEC.
Clues on Timing
Here’s what to look for if and when Shanda files for its much hyped IPO: If the filing states a dollar amount without the number of shares it plans to sell and a price range – it’ll be awhile before the deal makes its way onto the IPO calendar. If pricing terms are announced with the original filing, then look for the deal to be priced in a week or two.
Back to the Present
Assuming everything on the IPO calendar gets priced over the next two weeks, it would raise June 2009’s total to six and June would be the most active month since May 2008 when seven IPOs were priced.
Also, it would increase 2009’s first half to 12 IPOs, slightly better than 2003’s first half, when 10 IPOs were priced.
By the end of 2003, bankers had priced 84 IPOs for the full year. There’s still hope for 2009.
The Passing Parade
Cypress Sharpridge Investment (NYSE: CYS), a New York City-based specialty finance company, priced its IPO of 9.1 million shares at $11 each on Thursday evening. The IPO closed its opening day at $11.55 per share, UP 5 percent from its initial offering price.
The deal was priced on the low end of its filing range of $11 to $13 a share, but the size was increased to 9.1 million shares from 8.5 million.
There were unconfirmed rumors that at $11 per share, the deal would be oversubscribed. It must have been; it traded higher in the aftermarket.
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