I’m just kidding in my headline, I actually love IPOs. And after the long, miserable winter it’s always nice to see the babies being born.
One really good sign of this rebirth is happening in the venture capitalist space – startups in Manhattan and Silicon Valley are raising big wood right now. Another sign is in the growing strength of the IPO market, even if a lot of the action is concentrated in emerging markets.
Trader’s Narrative has some interesting IPO color as part of their weekly sentiment roundup…
One of the important signs of the health of the financial system is the quantity and quality of initial public offerings. During the 2008 bear market the IPO market shut down completely. Then right around the lows in the spring of 2009 we saw the first glimmer of life return to the IPO market. Then by fall 2009 it was clear that normalcy was slowly but certainly coming back.
So far in 2010 we’ve had 120 IPO pricings. That is the best IPO market since 2007 when in the first 7 months of 2007 there were approximately the same number (124) of pricings. Most of the action has been outside of the US market, especially concentrated in China and Hong Kong. Of course the record setting issuance ($19 billion) of Agricultural Bank in the summer was a milestone but there have been dozens of Chinese or Asian related IPOs since.
The IPO market hasn’t completely returned to normal but the doors are open once again and investors are more than willing to pick up companies that have a compelling narrative, reasonable valuations and attractive fundamentals. All in all, the foundation for continuing improvements have been laid.
In addition to the Asian deals, there is also, of course, the forthcoming GM IPO. Not exactly a debutante making her initial descent down the wraparound staircase, but that’s a whole other story.
There is also the LPL Financial IPO. This one looks to raise around $500 million. It is notable because it is basically a broker/dealer and an RIA firm that facilitates the running of an independent practice. I almost opened up shop as an indie through LPL myself, they run a very impressive operation.
I also noticed that Fresh Market ($TFM), a North Carolina-based grocery store chain (think Whole Foods but southern) was able to come public last week. The company had a monster debut – a 50% rise on day one. Rock on.
Anecdotally, my friends in the brokerage business are telling me that the syndicate calendar has been relentless. There are both Initial and Secondary offerings pricing four nights a week. They also note that the clients are sucking them down – even the virtually unlimited Goldman Sachs ($GS) preferred stock offering went quickly.
The best IPO market since 2007, add it to the list.