The IPO Buzz: Late Summer Break

There are two periods during the year when the IPO production line completely closes down and a couple of others when it hits speed bumps.
The shutdown periods run about four to six weeks from mid-December through mid- to late January for the year-end holiday and from mid-August through mid-September for the prelude to Labor Day and a week or two after that holiday.
The speed-bump periods last about a week each. There are two: The first is the end of May (Memorial Day holiday) and the other is early July (for the July 4th holiday).
The Comeback Kid
Overall, the summer of 2009 has been great and the IPO market has been on the comeback trail. If numbers are any indication, then look for more of the same from new issues going forward after the late summer break. Here’s what the numbers say:
The NASDAQ Composite Index has been on a five-month bull charge. It closed Friday, Aug. 14, at 1,985.52, UP 56.5 percent from 1,268.64, its March 9 closing low. Three months later, the IPO market started falling in line.
The summer of ‘09 produced 13 IPOs of the year’s 21 deals, according to U.S. Securities and Exchange Commission filings. They raised $3.8 billion of the year’s $5.3 billion in IPO proceeds so far. Additionally, 19 companies of the year’s 34 filed to go public during the summer. They are looking to raise nearly $8 billion of the $11.4 billion filed so far in 2009.
Compare this with 2008’s post-Labor Day traffic.
From September 2008 through March 2009, only three IPOs were priced. That’s right — three as in “1, 2, 3.” The trio raised $847.9 million.
The NASDAQ Composite was the target of a terrible bear mauling. On March 9, 2007, the Nasdaq Composite had fallen 55.6 percent from 2,859.12, its previous closing high on Oct. 31, 2007. During the seven months post-Labor Day of 2008, 13 companies filed to go public looking to raise $4.3 billion.
The numbers tell the story. But it helps to get confirmation.
Billion-Dollar Babies
The Wall Street professionals see the same trend — and they are going on record. Over the past week, the financial media carried stories of a bright IPO outlook. Let’s take a look at what was said:
Dealscape reported: “BarCap prepares for ‘tidal wave’ of private equity exits: Barclays Capital Group says it has around 100 private equity-owned companies in its database that are ready for an initial public offering in the next 12 to 18 months, according to Dow Jones Online Financial News.”
And Reuters News reported: “We’re going to see more than a handful of mega-IPOs file over the next month or two,” said Lisa Carnoy, global head of equity capital markets at Bank of America Merrill Lynch.”
Speaking of which, there have already been mega-IPO filings. A couple of billion-dollar babies have already hit the SEC’s IPO window. They were Hyatt Hotels (NYSE: H – proposed) ($1.15 billion) and JBS UDA Holding (NYSE: JBS – proposed) ($2 billion) — and this does not count a handful of $500 million filings.
Just because the IPO production line has closed down for the summer doesn’t mean there won’t be some action. Watch the SEC’s filing window. That will be the clue to the fall of 2009.
So enjoy that Mai Tai or pina colada as you gaze at the last sunsets of summer. But stay tuned for fall’s parade.