The IPO Buzz: Techs and Money

The markets closed at 1:00 p.m. on Tuesday and didn’t resume trading until 9:30 a.m. on Thursday. Only one IPO made it to market, but the bankers were burning the midnight oil. They were telling you there was a story in last week’s market.
For the first time since the “insanity dot-com” era ended in 2000, the IPO market is finding leadership. It’s from technology and financial services sectors.
But let’s back up for a minute and take a look of what happened last week. That’s where you’ll find the tea leaves. And then let’s compare the week with the same period a year ago.
Last Week
For the week ended July 6, 2007, 12 companies filed to go public, according to U.S. Securities and Exchange Commission filings. They were looking to raise $4.2 billion. Another seven companies filed amended papers announcing pricing terms. They were aiming to raise $1.4 billion, and two of those have already found their way to the IPO calendar with pricing dates. And, not to be forgotten, there was that one deal that got priced.
Last Year
For the week ended July 7, 2006, four companies filed to go public. They were looking to raise $858 million. Another five companies filed amended papers announcing pricing terms. They were hoping to raise $969 million. And nothing was priced during last year’s shortened July 4th week.
Below are the details from reading last week’s tea leaves.
The Technology Sector
ShoreTel (NASDAQ: SHOR), a Sunnyvale, California-based  VoIP provider, was able to get out the door after being derailed the previous week by a patent lawsuit.
On Monday evening, July 2, ShoreTel re-priced its IPO of 7.9 million shares at $9.50 each. That was below its $10.50 per share price set on the evening of Wednesday, June 27. In the wake of the lawsuit, ShoreTel was forced to go back to the drawing board and re-jigger its deal. The lawsuit cost the company about $7.9 million in lost proceeds. In the end, it did not scare off buyers. After all, Shoretel was from 2007’s hot IPO sector — technology — and investors picked a lot of money up off the floor.
The Shoretel IPO opened at $10 per share and closed its opening day at $12.15, UP 27.9 percent from its initial offering price.
The message was clear -– technology IPOs were in favor.
The other tea leaves found in the cup came from the SEC’s filing window.
The Financial Sector
The other tea leaves found in the cup came from the SEC’s filing window.
The financial sector highlighted last week’s filing traffic with two high-profile IPOs. They were the $1.25 billion KKR & Co. L.P. (Kohlberg Kravis Roberts & Co.) (NYSE: KKR proposed) IPO and the $2 billion Och-Ziff Management Group (NYSE: OZM proposed) IPO.
All in all, a dozen companies jumped into the IPO pipeline, and four of them came from -– yes — the technology sector. There was more.
Among the companies filing proposed pricing terms, two jumped onto the IPO calendar with pricing dates. One was a technology company and the other one was a Bermuda-based insurance company. They were:
Airvana (Nasdaq: AIRV proposed) is a Massachusetts-based provider of mobile broadband infrastructure products used by wireless carriers. This company’s performance shows why  technology IPOs are hot. It has soaring revenues and it reported a sharp profit in 2006. Airvana plans to price 8.3 million shares at $8 to $10 each during the week of July 16.
Validus Holdings (NYSE: VR proposed), a reinsurance company – yes, that’s the financial services sector — plans to price 15.7 million shares at $24 to $26 each during the week of July 23.
Even though the IPO production line is still closed down from the Fourth of July holiday, the word is out: Don’t leave town.
The Nasdaq Composite Index closed on Friday at a six-and-a-half-year high. That’s creating a nice fire under the IPO teapot. It looks like it’s going to brew up a busy and, possibly, hot summer.
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