The IPO Buzz: Out of the Deep Freeze

The secondary calendar produced 11 deals. By week’s end, five closed above their offering prices, four finished below and two didn’t make it out the door. Those two were The Medicines Co. (NASDAQ: MDCO) and RAM Energy Inc. (NASDAQ: RAME).
In a press release, Medicines said it “will not proceed with a proposed stock offering as it expects some ‘administrative activity’ on its bid to extend a patent on its flagship drug Angiomax, a blood thinner.” An investor leaving a due diligence meeting reportedly said it all: “Call me when you get it.”
RAM Energy’s stock fell nearly 15 percent from the time it filed for its secondary offering on Nov. 22, when it was trading at $5.41 per share, to $4.61 per share on Jan. 22, when the deal was “delayed.”
Time to Thaw
But the IPO market fared better.
Bankers priced three deals on the IPO calendar. By week’s end, two closed above their initial offering prices and one finished below, while four got pushed off into the future. The three had an average gain of 19 percent. (Please see “Last Week’s IPO Traffic” for details.)
Consider what was “missing in action.” They were three “blank check” deals and a unit offering.
For “blank check” offerings not to make it off the IPO launching pad is normal. They have been running into roadblocks trying to get out of the Securities and Exchange Commission. From many reports, the SEC has countless and continual questions concerning the “blank check” offerings. Every time the bankers think they have answered the SEC, back comes the Commission with more and the pricing date drags on.
This is the reason bankers can not and will not give a pricing date for their “blank check” offerings. The best they can say is: “For the week of …”
The unit offering, the fertilizer producer Converted Organics, is now expected in early February. But before that materializes, we still have the end of January to contend with. And the outlook is good.
Bankers plan to price 12 deals during January’s final week. They expect to raise over $1.8 billion. This could be the busiest since the week of December 18, when bankers priced 13 IPOs.
Everybody Loves a Winner
Supporting the new-issues calendar is a strong IPO aftermarket performance. Take a look at the scorecard for the “Last 100 IPOs” priced.
The last of the 100 was priced on Sept. 19, 2006, and on Friday, Jan. 26, 2007, 80 of those 100 IPOs closed above their initial offering prices!
That’s a win-loss ratio of 80 percent!
There’s more. Their average gain was 29 percent compared with a 9.6 percent gain for the Nasdaq Composite Index.
Now back to the present.
Among the headliners are an insurance company (Employers Holdings – NYSE: EIG proposed), a real estate services provider (HFF – NYSE: HF proposed) and a producer of veterinary products (Animal Health International – NASDAQ: AHII proposed). At one time, each has been on somebody’s “most wanted” list, according to the IPO professionals who participate in the Street Consensus of Opening Premiums, or SCOOP ratings, for short.
Oh yes, there are now six “blank check” deals on the calendar, including three from last week.   
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