VOL. 37 | NO. 38 | Friday, September 20, 2013
National Business
Burst of IPOs follows gains in stock market
SARAH SKIDMORE SELL, AP Business Writer
The stock market has been heating up, driving demand for IPOs. There have been 140 initial public offerings of stock this year, up 46 percent from the same time in 2012, according to IPO tracking firm Renaissance Capital. Of the eight companies that went public this week, two — cybersecurity software maker FireEye and technology advertising company RocketFuel — nearly doubled in value Friday.
The pace does not appear be slowing down. Next week, market watchers expect as many as 13 more companies to make their debuts. If all of them price, it will be the most IPOs in the U.S. in one week since 2007, when 14 hit the market at once, according to data provider Dealogic.
With the stock market hitting new highs, investors want to take chances they might not otherwise take in a flat or down market, said Scott Sweet, senior managing partner at IPO Boutique, which researches and invests in IPOs.
The Standard & Poor's 500 index, a broad gauge of the stock market, has risen nearly 5 percent this month. If that holds, it would be the index's best monthly performance since January. Even with Friday's decline, stocks are near all-time highs set earlier this week.
How many companies are going public and how much money they're raising reflect investors' confidence and taste for taking risks. A rising stock market can make investors feel more optimistic about the general business climate and more eager to take a chance. Companies can grow quickly after an IPO, adding jobs and making investments with the new cash that can help buoy the economy.
The success of some prominent IPOs in recent years, such as Michael Kors Holding Ltd., has also helped increase investors' appetite, said Josef Schuster, an IPO analyst. Michael Kors stock is worth almost four times as much as its $20 offering price in December 2011. And more are coming. Social media company Twitter intends to go public. Real estate brokerage Re/Max Holdings Inc. hopes to raise as much as $210 million — above the $100 million projected in August, when the company filed plans to become public. That suggests that there is strong demand for widely recognized brands.
While Schuster says there is an investment case to be made for IPOs, recent market activity leads him to believe deals will be priced higher. Sweet echoed his concerns and said that with the rush of IPOs coming to the table, quality may start to falter.
"What I'm concerned about is...they will open the floodgates, which it looks to be the case, the quality will go down and the game will abruptly come to an end," Sweet said.
Here's a look at the companies anticipated for the week of September 23:
— Applied Optoelectronics Inc. — Fiber-optic networking products provider based in Sugar Land, Texas. Expected to offer 3.6 million shares, priced $13 to $15.
— Covisint Corp. — Detroit-based company that provides a data sharing platform primarily to the auto and health care industries. Expected to offer 6.4 million shares, priced $9 to $11.
— Enzymotec Ltd. — Israeli maker of lipid-based nutritional ingredients and medical foods. Expected to offer 4.4 million ordinary shares, priced $16 to $18.
— Evoke Pharma Inc. — Biopharmaceutical company based in San Diego that develops drugs to treat gastrointestinal disorders and diseases. Expected to offer 2.1 million shares, priced $12 to $14.
— Fate Therapeutics Inc. — A San Diego biotechnology company developing stem cell treatments. Expected to offer 4 million shares, priced $14 to $16.
—Foundation Medicine Inc. — Cambridge, Mass.- based company that offers diagnostic cancer analyses that provide patient-specific data for physicians. Expected to offer 5 million shares, priced $14 to $16.
— Montage Technology Group Ltd. — A provider of chips for set-top boxes, based in China. Expected to offer 7.1 million ordinary shares, priced $12 to $14.
— Ophthotech Corp. — A New York biotechnology company developing therapies for eye diseases. Expected to offer 5.7 million shares, priced $16 to $19.
— Pattern Energy Group Inc. — Wind power company, based in San Francisco, with eight projects in U.S., Canada and Chile. Expected to offer 16 million shares, priced $19 to $21.
— Premier Inc. — A company that collects and analyzes clinical and financial data for health care facilities, based in Charlotte, N.C. Expected to offer 28.2 million shares, priced $23 to $26.
— RingCentral Inc. — Cloud-based phone system provider for small businesses, based in San Mateo, Calif. Expected to offer 7.5 million shares, priced $11 to $13.
— Tecogen Inc. — A maker of natural gas-fueled heat and power products that aim to reduce energy costs and greenhouse gas emissions, based in Waltham, Mass. Expected to offer 3 million shares, priced $6 to $8.
Violin Memory Inc. - A flash storage maker based in Mountain View, Calif. Expected to offer 18 million shares, priced $8 to $10.