The IPO Buzz: The IPO Trifecta

That mystery was clarified on Friday morning, June 10, when Pandora Media filed to increase the size of its IPO by 47.5 percent. The old Wall Street adage applies: Increase a deal, double my order.

 

Pandora Media, based in Oakland, California, believes it is the leading provider of Internet music service in the United States. The company, founded in 2000, has about 360 employees. Pandora Media reported a net loss of $6.8 million on revenues of $51 million for the three months ended March 31, 2011, compared with a loss of $3 million on revenues of $21.6 million for the same period a year ago.

 

Pandora Media now plans to offer 14.7 million shares at $10 to $12 each to raise $161.5 million, up from 13.7 million shares at $7 to $9 each to raise $109.5 million.

 

The IPO is expected to be priced on Tuesday evening, June 14, to trade on Wednesday morning, June 15, on the New York Stock Exchange under the proposed symbol “P.” (For history buffs, that was the old trading symbol for Philips Petroleum.) Joint-lead managers are: Morgan Stanley, J .P. Morgan Securities and Citi.

 

(Note: The company plans to offer 6 million shares and selling shareholders plan to offer 8.7 million shares.)

 

In the U.S. capital markets, the three largest IPOs in 2011 have been backed by private-equity firms, according to the U.S. Securities and Exchange Commission filings. They were:

 

HCA Holdings (HCA), a Nashville-based healthcare provider, offered 126.2 million shares at $30 to raise $3.79 billion on March 9. The IPO closed on Friday, June 6, at $33.90, UP 13 percent from its initial offering price.

 

Kinder Morgan (KMI), a Houston-based operator of energy infrastructure in the United States and Canada, offered 95.5 million shares at $30 to raise $2.86 billion on Feb. 10. The IPO closed on Friday at $29.50, DOWN 1.57 percent from its initial offering price.

   

Nielsen Holdings N.V. (NLSN), a Netherlands-based provider of media and marketing information, offered 71.4 million shares at $23 to raise $1.64 billion on Jan. 26. The IPO closed on Friday at $30.56, UP 32.9 percent from its initial offering price.

 

Bankrate, based in North Palm Beach, Florida, provides consumers with proprietary, independent and objective personal finance editorial content across multiple vertical categories, such as mortgages, deposits, insurance, credit cards and other categories including retirement, automobile loans and taxes.

 

The company, founded in 1976, has about 380 employees. Bankrate reported net income of $5.1 million on revenues of $99.1 million for the three months ended March 31, 2011, compared with a loss of $5.2 million on revenues of $34.5 million for the same period a year ago.

 

Bankrate plans to offer 20 million shares at $14 to $16 each to raise about $300 million.

 

The IPO is expected to be priced on Thursday evening, June 16, and to trade on Friday morning, June 17, on the New York Stock Exchange under the proposed symbol “RATE.” Joint-lead managers are: Goldman Sachs, BofA Merrill Lynch, Citi and J.P. Morgan.

 

(Note: The company plans to offer 12.5 million shares and selling shareholders plan to offer 7.5 million shares.)

 

A walk through the valley of high yield with capital gains is most peoples’ dream. In reality, it usually doesn’t happen – except maybe, in the case of limited partnerships going public.

 

About eight LPs have gone public this year with mixed results. Their opening-day performances show five winners, two losers, one unchanged and an average gain of 4.44 percent. That is underperforming all of 2011’s IPOs.

 

To date, 69 companies have gone public so far this year; of those, 46 were opening-day winners, 20 were losers and three were unchanged. The average opening-day gain was 15.7 percent.

 

Fast forward to June 10: The LPs show four up, four down with an average aftermarket gain of 3.84 percent.

 

The 2011 Scorecard for all 69 IPOs was 46 up, 20 down and three unchanged with an average aftermarket gain of 9.36 percent.

 

Compressco Partners, L.P., based in Oklahoma City, is a provider of natural gas wellhead compression services to more than 400 natural gas and oil companies in the United States and overseas.

 

The company, founded in 2008, has about 375 employees. Compressco reported pro forma net income of $2.7 million on revenues of $21.8 million for the three months ended March 31, 2011, compared with net income of $719,000 on revenues of $20.3 million for the same period a year ago.

 

Compressco plans to offer 2.5 million common units at $19 to $21 each to raise about $300 million.

 

The IPO is expected to be priced during the week of June 13 to trade on the NASDAQ Global Market under the proposed symbol “GSJK.” Joint-lead managers are: Raymond James and J.P. Morgan.

 

(Note: Compressco expects to pay the minimum quarterly distribution of $0.3875 per unit for each complete quarter, or $1.55 per unit on an annualized basis for a yield of 7.75 percent.)

 

And this carries us into next week.

 

Stay tuned.