When the stock market opened on Monday, July 23, bankers had planned to price eight IPOs and expected to raise $1.26 billion. By Friday’s close, all eight were priced. Bankers raised $1.24 billion.
But we know what happened last week.
The popular stock indexes got pounded with losses of well over 4 percent each. With this chilly wind in their faces, last week’s class of IPO graduates scored an average gain of 23.8 percent. That sets the stage for this week’s IPO calendar. Bankers aim to price seven new issues. They expect to raise $1.3 billion.
Actually, they might just get away with it.
All seven are expected to by priced Wednesday evening, August 1, for trading on Thursday morning. As we have just seen, a lot can happen in a few short days. So let’s take a look at a couple of names on the calendar.
Last week’s meltdown transformed Genpact Limited (NYSE: G proposed) from a featured deal on the week’s “most wanted list” into an “also ran,” according to the IPO handicappers whose professional opinions make up the Street Consensus of Opening Premium (SCOOP) ratings.
Nevertheless, here’s the story of Genpact, a Bermuda-based information technology service provider.
Genpact began operations in 1997 as an India-based business process service provider for GE Capital. Ten years later, the company manages business processes for 35 clients in nine countries. The clients are banks, financial services and insurance companies, as well as manufacturers, transportation firms, and health-care providers. Genpact provides sales and marketing analytics; financial services core operations and collections, and supply chain, finance and accounting, information technology, and enterprise application services.
For the year ended Dec. 31, 2006, Genpact reported net income of $39.8 million on revenues of $613 million, up from net income of $17.1 million on revenues of $491.9 million for the same period a year ago.
But Genpact isn’t the only information technology provider on this week’s calendar.
Virtusa (NASDAQ: VRTU proposed), based in Westborough, Massachusetts, is a global provider of a variety of software development and information technology services, including software engineering, application development, training, maintenance, systems design, and legacy migration. Its clients include financial services, telecommunications, manufacturing and retail companies. Virtusa has offices in the United States, the United Kingdom, India and Sri Lanka.
The allure of Virtusa is found in its financial statements. For the year ended March 31, 2007, it reported net income of $19 million on revenues of $124.6 million, compared with net income of $2 million on revenues of $79.9 million for the same period a year ago.
But there’s more.
For the three months ended March 31, Virtusa reported net income of $3.5 million on revenues of $35.2 million, compared with net income of $2.6 million on revenues of $23.2 million for the same period a year ago.
At press time, both have modest SCOOP ratings, but things can change.
Last Week’s Passing Parade
To figure out how well or how poorly an IPO would do in the aftermarket, all you had to do was look at the cover of the final prospectus compared with its preliminary one, or “red herring.”
Three deals were priced ABOVE their original filing ranges:
- BladeLogic (NASDAQ: BLOG) priced its IPO at $17, up from an earlier filing range of $12 to $14 per share. BladeLogic closed Friday at $25.29, UP 48.8 percent from its offering price.
- lululemon athletica (NASDAQ: LULU), priced its IPO at $18, up from an earlier filing range of $10 to $12 per share. lululemon closed Friday at $28, UP 55.6 percent from its offering price.
- Perfect World (NASDAQ: PWRD) priced its IPO at $16, up from an earlier filing range of $12 to $14 per share. Perfect World closed Friday at $25.65, UP 30.3 percent from its offering price.
Average aftermarket gain: 54.7 percent
Conclusion: Increase a deal, double my order!
Five deals were priced BELOW their original filing ranges:
- Monotype Imaging Holdings (NASDAQ: TYPE), priced its IPO at $12, down from an earlier filing range of $13 to $15 per share. Monotype closed Friday at $12.06, UP 0.5 percent from its offering price.
- ImaRx Therapeutics (NASDAQ: IMRX) priced its IPO at $5, down from an earlier filing range of $6.50 to $7.50 per share. ImaRx closed Friday at $4.75, DOWN 5 percent from its offering price.
- Rex Energy (NASDAQ: REXX) priced its IPO of 9.6 million shares at $11 each, down from an earlier filing of 14.7 million shares at $11 to $13 each. Rex Energy closed Friday at $10.15, DOWN 7.7 percent from its offering price.
- Validus Holdings (NYSE: VR) priced its IPO of 15.2 million shares at $12 each, down from an earlier filing of 15.7 million shares at $24 to $26 each. Validus closed Friday at $21.85, DOWN 0.68 percent from its offering price.
- Voltaire (NASDAQ: VOLT) priced its IPO of 5.77 million shares at $9 each, down from and earlier filing of 7.7 million shares at $12 to $14 each. Voltaire closed Friday at $8.40, DOWN 6.67 percent from its offering price.
Average aftermarket loss: 3.03 percent
Conclusion: Cut a deal, cancel my order!
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