The IPO Buzz: IPOs American Style

There were five Chinese companies looking to go public in the U.S. capital markets last week. Most were reduced in size, four made it to market, and each broke below their initial offering prices in the aftermarket. The other Chinese IPO was postponed “due to market conditions.”

 

Since the highly touted Shanda Games (NASDAQ: GAME) tanked during its first day of trading on Sept. 25, 2009, the Chinese IPO scorecard rates a flat “F.”

 

Consider this: Over the last four months, 12 Chinese companies have gone public, including the Shanda debacle, according to SEC filings. As of Friday’s close on Jan. 29, only three Chinese deals were in the winner’s circle, the other nine were losers, and the average loss for all 12 was 11.5 percent.

 

7 Days Group (NYSE: SVN) turned in the best performance from the “deadly dozen” and it was not even up a dollar per share. On Nov. 11, 2009, the IPO of 7 Days was priced at $11 per share. It closed on Friday, Jan. 29, 2010, at $11.98, UP 8.8 percent from its initial offering price.

 

And Shanda? Here are the facts: Shanda priced 83.5 million shares at $12.50 each and the IPO closed its opening day at $10.75, DOWN 14 percent. The investment professionals had been high on this deal, and some were looking for an opening premium of 3 to 5 points. Then the underwriters added another 20 million shares to the deal. That killed it. Shanda closed last Friday at $8.50, DOWN 32 percent from its initial offering price.

 

In contrast, 29 non-Chinese companies have made their debuts on Wall Street since Sept. 25. Eighteen closed on Friday above their initial offering prices, and the average gain for all 29 was 8.1 percent. That’s the best scorecard around these days.

 

On Jan. 29, the Nasdaq Composite Index closed at 2,147.35, UP 1.9 percent from 2,147.35, its close on Sept. 25, 2009.

 

But things were much rosier last week at the SEC filing window.

 

Consider last week’s traffic: Eight companies filed plans to go public; 10 companies filed amended plans (S/1As); eight unveiled proposed pricing terms, and five of those jumped onto the IPO calendar.

 

You can probably see a pickup of amended filings from companies in the IPO pipeline as companies start reporting their 2009 year-end results.

 

This week and next week, the calendar lists nine offerings -– four this week and five the next. The input from investment professionals is a bland rating for most. But there’s an exception -– an American company looking to go public during the week of February 8. It is QuinStreet (NASDAQ: QNST – proposed) -– a California-based provider of online marketing and advertising services. But more on this next week.

 

Stay tuned.