On Wednesday, Nov. 3, GM disclosed plans to offer 365 million shares at $26 to $29 each, to raise slightly over $10 billion, based on the mid-point of its price range. The IPO is expected to be priced on Wednesday evening, Nov. 17, to trade the following morning. Stories circulated that the White House wanted a higher price and bankers wanted a lower price. Nevertheless, the final price will be determined not by the White House, not by the bankers, but by the buyers.
Flying under the radar last week: There was a big wave of companies filing pricing terms and seeing their IPOs jump onto the new-issues calendar with offering dates. That’s noteworthy.
Just after GM’s announcement, six other companies, led by Booz Allen Hamilton Holdings (BAH – proposed), announced offering terms with pricing dates. And most are expected to come to market ahead of the GM deal. It was as if they were standing in the wings waiting for GM to make its move, and then hustling to beat the GM deal out the door.
All of this action shows the Street is alive with the sound of IPOs.
Running of the Bulls
Over the last four months, the climate has turned favorable for the stock market and the IPO calendar. The bulls have been on the run since the year’s low was set on July 2.
The Nasdaq Composite Index, the barometer of the IPO market, closed Friday, Nov. 5, at 2,578.99, UP 23.3 percent from its close at 2,091.79 on July 2nd. The close on Friday, Nov. 5, was also the highest closing price for the Nasdaq Composite Index since Jan. 3, 2008, when it had closed at 2,602.68.
The thunder of the bulls’ hooves running down Wall Street opened the door for the IPO market to flourish.
Over the last four months from July 2nd to now, bankers have priced 56 of this year’s 119 deals, which exclude 8 unit offerings, according to the U.S. Securities and Exchange Commission’s filings. Another 17 IPOs are scheduled to make their debuts this week and next.
The Good Luck Club
Bankers plan to price eight deals this week. They expect to raise almost $800 million.
The IPO handicappers are looking to China for their “pick of the week.” The focus is on:
Noah Holdings Limited (NOAH – proposed) is a Shanghai-based financial service firm offering wealth management products to China’s high-net-worth population. The company offers fixed-income products, private equity funds and securities investment funds through 28 branch offices with over 300 relationship managers.
The watchword in the IPO market has always been simple: Go where good luck happens. And 2010’s Chinese IPOs have been the place.
As of Friday’s close, 26 Chinese IPOs have been priced in the U.S. capital markets. Nineteen were in the winner’s circle, while 7 were below water. The average gain for all 26 was 51.4 percent. Let’s compare that performance with the non-Chinese IPOs.
As of Friday’s close, 93 non-Chinese IPOs have been priced in the U.S. capital markets. Fifty-two were in the winner’s circle, while 40 were underwater, and one was unchanged. The average gain for all 93 was 16.2 percent.
Sometime, somewhere, someplace the hot Chinese IPO traffic will dry up. None of the IPO handicappers expect it to happen this week.
Disclosure: Neither the author nor anyone else on the IPOScoop.com staff has a position in any stocks mentioned, nor do they trade or invest in IPOs. The author and IPOScoop.com staff do not issue advice, recommendations or opinions.