The IPO Buzz: The Sound of IPOs

The reason was clear.

 

Take a look at the ticker tape. For 2011 Q1, the Dow Jones Industrial Average gained 6.41 percent, the S&P 500 gained 5.42 percent and the Nasdaq Composite gained 4.83 percent. From their previous lows set on July 2, 2010 – nine months ago – through the closing bell on March 31, 2011, the Dow had gained 27.2 percent, the S&P 500 had climbed 29.7 percent and the Nasdaq Composite had advanced 33 percent.

 

There was no way around it. The bulls were on the run.

 

Now back to the present: Let’s take a look at what is on the IPO launching pad for this week. The calendar has four deals — a carryover from last week and three new faces. Bankers expect to raise slightly over $750 million. That’s about an “average” 2010 week. In 2010, 164 IPOs were priced (or 3.1 per week) that raised $39.7 billion (or $763 million per week).

 

What’s not “average” is how the 2011 calendar is coming together.

 

Last Monday, March 28, the IPO calendar for this week, April 4, was clean and green – zip, nothing – and for next week, April 11, one deal. This isn’t what you’d think of as a land of plenty. Then things changed.

 

Driven by the underlying strength in the stock market, bankers started adding names to the pipeline and the calendar. That brings us to this week.

 

Fans of “The Sound of Music” may remember a youthful Mary Martin or a dewy Julie Andrews singing, “Tea, a drink with jam and bread” in the Broadway or silver screen versions of that Rodgers and Hammerstein classic musical.

 

This week’s IPO calendar starts out with “T,” but it’s not the kind you would serve in your grandmother’s antique teacup. It’s “T” as in Tranzyme (TZYM – proposed), the carryover, which priced its IPO of 13.5 million shares at $4 each Friday afternoon. That was reduced from 5 million shares at $11 to $13 each. Tranzyme is scheduled to start trading on Monday, April 4.

 

Tranzyme is a biopharmaceutical company that specializes in small-molecule drugs used to treat such chronic illnesses as severe diarrhea and metabolic diseases, including obesity.

 

There are two names on the calendar that the Street thinks might be interesting. Here’s where the IPO market’s sheet music turns to the key of “C” as in CVR Partners, LP (UAN – proposed) and the key of “G” as in Golar LNG Partners LP (GMLP – proposed). Both are limited partnerships, which usually means yield plays.

 

CVR Partners is a limited partnership formed by CVR Energy (CVI) to own, operate and grow its nitrogen fertilizer business. The company plans to price 19.2 million common units at $12 to $14 each on Thursday evening, April 7, to trade on Friday.

 

Note: Its prospectus states: “As of February 28, 2011 … (CVR) forecasted distribution for the twelve months ending March 31, 2012, of $1.92 per common unit by the mid-point of the price range on the cover page of this prospectus.”) That works out to a yield of 14.8 percent.

 

Golar LNG Partners LP is a limited partnership formed by Golar LNG Limited (GLNG) to own and operate floating storage and regasification units and liquefied natural gas (LNG) carriers under long-term charters. The company plans to price 12 million common units at $20 to $22 each on Thursday evening, April 7, to trade on Friday.

 

Note: Its prospectus states: “We intend to distribute to the holders of common units and subordinated units on a quarterly basis at least the minimum quarterly distribution of $0.3850 per unit, or $1.54 per unit per year.” That works out to be a yield of 7.33 percent.

 

The surging stock market has opened the IPO window and there are several mouthwatering deals in the pipeline:

 

KAYAK Software (KYAK – proposed) is a technology-driven company committed to improving online travel. The co-founders of Expedia, Travelocity and Orbitz started Kayak in 2004. The company plans to raise $50 million. At press time, there is no pricing date.

 

LinkedIn believes it is the world’s largest professional network on the Internet with more than 90 million members in over 200 countries and territories. The company plans to raise $175 million. At press time, there is no pricing date.

 

Pandora Media believes it is the leader in Internet radio in the United States, “offering a personalized experience for each of our listeners,” according to the company. Pandora Media plans to raise $100 million. At press time, there is no pricing date.

 

Then there’s talk about some other companies that may be filing to go public:

 

Facebook, Hi Mark!

 

Groupon is a “deal-of-the-day” Website offering coupons for anything from a local restaurant or retail store to a hotel or spa in over 150 cities across the Americas and Europe. 

 

Zynga Game Network believes it is the world’s largest online social game developer and services more than 60 million users per day.

 

Yes, the market is coming alive with the sound of IPOs. Life, as it turns out, can be fun.