The IPO Buzz: When the IPO Past Is Prologue

The stock market closed Friday at a new high for 2016, but IPOs were nowhere in sight. Maybe the problem is the underperformance of the NASDAQ Composite Index. Even though the NASDAQ closed last week at 4,914.54, it was still DOWN 1.85 percent for the year. It closed at 5,007.41 on Dec. 31, 2015.

In another era, the technology-laden NASDAQ Composite was considered the barometer of the IPO market. Back then, about 60 percent to 70 percent of the weekly IPO calendar would be technology companies – and about 70 percent to 75 percent of the calendar was scheduled to trade on the NASDAQ. Most of those IPOs did not meet the higher listing requirements of the New York Stock Exchange.

It was pretty straightforward in yesteryear. When the NASDAQ was on a roll, there would be an IPO calendar. When the NASDAQ was on a slide, there would be little to no IPO activity.

Over the last 15 months or so, records show fundraising for technology companies turned into a private bidding war in Silicon Valley. That road was easier than going public via the IPO calendar.

However, there could be light at the end of the IPO tunnel.

On the Road Again

If you believe the stories swirling around Wall Street late last week and reported by many in the financial media, a couple of technology companies already in registration will launch their roadshows this week. That is the second step in pricing an IPO. The first step is filing an updated amendment posting proposed pricing terms.

The names were BATS Global Markets (BATS – proposed) and SecureWorks (SCWX – proposed).

BATS Global is a Lenexa, Kansas-based financial technology company or a “fintech” in Wall Street jargon. BATS Global was formed as an alternative to the NYSE and Nasdaq. The company says it is the second-largest exchange operator in equities, the largest exchange operator of ETFs in terms of market share, and the largest European exchange operator in terms of value traded as of Dec. 31, 2015, according to the prospectus. During 2015, BATS Global ran the fastest-growing U.S. market for exchange-traded options in terms of market share, the prospectus said.

SecureWorks is being spun out of Dell. It is an Atlanta-based cybersecurity software and consulting company servicing over 4,200 clients in 59 countries.

Metabolize This

Turning to this week, the calendar lists just one IPO from the health-care sector. Some insist on calling it a “biotech.” It isn’t. It is a pharmaceutical preparation company, according to its U.S. Securities and Exchange Commission Standard Industrial Classification Code.

Aeglea BioTherapeutics (AGLE – proposed) is an Austin, Texas-based biopharmaceutical company developing enzyme-based therapeutics in the field of amino acid metabolism. The company is developing products to treat cancer and rare genetic diseases caused by inborn errors of metabolism.

Bankers expect to price 3.5 million shares at $16 to $18 each on Wednesday evening to trade Thursday morning on the NASDAQ Global Market.

Note: Certain existing stockholders have indicated an interest in purchasing up to $30 million worth of stock at the IPO price. This is slightly over 50 percent of the $59.5 million that Aeglea and its bankers expect to raise.

(For more information, please click here: Aeglea BioTherapeutics)

Looking into the week of April 11, 2016, the IPO calendar is clean and green. But all eyes will be on the SEC’s filing window on Monday morning to see if BATS Global and SecureWorks will be filing updated amendments with the number of shares to be offered and the price ranges of their pending IPOs. If so, it could be springtime for IPOs.

Stay tuned.

Disclosure: Neither the author nor anyone else on the staff has a position in any stocks mentioned, nor do we trade or invest in IPOs. The author and staff do not issue advice, recommendations or opinion.