Note the following: There have been two single-day point declines this year that were sharper than Friday’s downdraft. The first was Feb. 27, when the Dow Jones Industrial Average fell 416.02 points after China’s main stock index slid almost 9 percent. The second was Aug. 9, when the Dow slid 387.18 points after a French bank raised concerns about the risky U.S. subprime mortgage market.
In neither case, did the IPO production line shut down.
By Friday’s close, bankers had priced 202 IPOs this year, according to U.S. Securities and Exchange Commission’s filings. Fifty of the 202 were unit offerings, such as the “blank check” IPOs. That figure was sharply ahead of 2006’s pace. By the close on Friday, Oct. 20, 2006, bankers had priced 165 IPOs.
Judging from the stock market’s behavior this year with its sharp single-day sell-offs and the effect on the IPO calendar, it could be nothing more than a speed bump on Wall Street.
It didn’t seem to harm Friday’s IPO traffic.
On Thursday evening, bankers priced three deals. As they were soon to learn, those IPOs were stepping into a sharply declining stock market on Friday. (The date, Oct. 19, was the 20th anniversary of the stock market’s crash on “Black Monday” in 1987.) Nevertheless, each IPO exploded like popcorn in the aftermarket.
DuPont Fabros Technology (NYSE: DFT), a Washington, D.C.-based real estate investment trust, or REIT, priced its IPO of 30.5 million shares at $21 each, on the high end of its $19- to $21-per-share filing range. It started trading Friday morning at $21.50, sold as high as $23.24, and closed at $22.71 — up $1.71 per share from its initial offering price. That’s a gain of 8.1 percent.
Maxcom Telecommunications (NYSE: MXT), a Mexico City-based provider of voice over Internet protocol (VoIP) services in Mexico, priced its IPO of 9.7 million shares at $17.50 each, on the high end of its $15.50- to $17.50-per-share filing range. It started trading Friday morning at $19, sold as high as $19.98, and closed at $18.59 — up $1.09 per share from its initial offering price. That’s an increase of 6.2 percent.
Noah Education Holdings (NYSE: NED), a Shenzhen-based provider of interactive digital learning devices in China, priced its IPO of 9.8 million shares at $14 each, above its $9.80- to $11.80-per-share filing range. It started trading Friday morning at $22.90, sold as high as $23.70, and closed at $19.85 — up $5.85 per share from its initial offering price. That’s a surge of 41.8 percent.
More from the Chinese Menu
Come Monday morning, on Oct. 22, people’s interest will be focused on Asia and how Wall Street’s belly flop on Friday will affect the worldwide securities markets. In the background is an IPO calendar, with 12 deals looking to raise $1.7 billion.
On that calendar are a couple of carryovers from previous weeks, a weak deal or two, and a couple from the hot IPO sector –- Chinese new issues.
The Chinese deals are Fuqi International (NASDAQ: FUQI proposed) and Longtop Financial Technologies (NYSE: LFT proposed).
Fuqi International is a Shenzhen, China-based designer of high-quality jewelry featuring precious metals, with surging sales and profits.
For the 12 months ending June 30, 2007, Fuqi showed sales of $98.1 million, up from $15.2 million for the year ending Dec. 31, 2002, which was four-and-a-half years earlier.
For the 12 months ending June 30, 2007, Fuqi showed net income of $8.5 million, up from $1 million for the year ended Dec. 31, 2002.
Longtop Financial is a Xiamen, China-based software developer and information technology services provider targeting the financial services industry in China.
You can talk about a profitable IT company with sharp sales growth, but its bankers have already sent out signals that the deal is hot.
On Friday, the proposed offering price was increased to $14 to $16 per share — up from $12 to $14 per share.
Remember the saying?
“Increase a deal, double my order!”
That’s all you really need to know about Longtop Financial.