The IPO Buzz: Cruising into June

Here’s what coming to market: A China-based clean energy provider and a Midwestern real estate investment trust.

 

Nobao Renewable Energy Holdings Ltd. (NRE – proposed) is a Shanghai-based provider of fully integrated clean energy management solutions in China. Welsh Property Trust (WLS – proposed) is a Minnesota-based REIT formed to acquire, own, operate, and manage industrial and office properties primarily across the central United States and to provide real estate services to commercial property owners.

 

Both deals are expected to be priced on Thursday evening, June 3^rd, to trade on Friday morning.

 

Nobao Renewable will be the latest Chinese energy company to go public in the U.S. capital markets, and the 18th over the last 12 months, according to the U.S. Securities and Exchange Commission filings. Their track records have not been all that good. Consider the following:

 

JinkoSolar Holding Co., Ltd. (JKS) is a Jiangxi Province-based solar product manufacturer. On May 14, 2010, JinkoSolar offered its IPO of 5.8 million American Depositary Shares (ADS) at $11 each to raise $63.8 million. The deal was priced on the low end of its recent filing range of $11 to $13 per share, but DOWN from its initial filing. On Jan. 20, 2010, JinkoSolar had initially filed to offer 10.6 million ADS at $6 to $8 each to raise $74.2 million. The IPO closed on Friday, May 28, at $10.45, DOWN 5 percent from its offering price.

 

Dating back over the last 12 months, 17 Chinese-based IPOs have been priced in the U.S. capital markets. On May 28, four closed above their initial offering prices, 12 closed below and one was unchanged.

 

The average loss –- yes, loss — for these 17 Chinese deals was 15.5 percent.

 

In comparison, the Nasdaq Composite Index was up 27.1 percent over the same period of time.

 

Over the last 12 months, 14 real estate investment trusts, or REITs, have gone public. Nine deals were cut in size to meet a limited demand; three were priced within filing range and one went public above range.

 

The average opening day loss – yes, loss -– for these 14 REITs was 1.83 percent.

 

From 1970 through 2009, the summer months of June, July and August can be noteworthy. The busiest on record came in 1986 when 248 of the year’s 724 deals were priced. That was 34.3 percent of year’s IPO traffic. And that was accomplished in a declining stock market. On Aug. 29, 1986, the Nasdaq Composite closed at 382.90, DOWN from 400.20, or off 4.32 percent from its close on May 30.

 

Fast forward to the present. When the latest offerings hit the SEC’s filing window last week, they turned a few heads and set the financial media buzzing. Consider the following:

 

Toys “R” Us (TOYS – proposed), the toy retailer that’s also a household name, filed last week for an IPO to raise $800 million.

 

The much anticipated Chicago Board Options Exchange or CBOE (CBOE – proposed) IPO set offering terms to price 11.7 million shares at $27 to $29 each, to raise $327.6 million.

 

The CBOE offering could be the deal people are looking for to put some spark back into the IPO calendar. We’ll find out soon enough. The CBOE IPO is set to be priced during the week of June 14.