The IPO Buzz: Fall Frenzy

 

All that and more took place in last week’s market.

 

Since the beginning of September, the IPO market has been flying. Bankers had priced 36 deals by the close of business on Friday, Oct. 27, excluding unit offerings. Here’s the scorecard:

 

Check the home page of IPOSCoop.com for a comparison for the 2006 IPO Scorecard.

 

 

The blockbuster was Industrial and Commercial Bank of China (ICBC) offering US$19.1 billion (or US$21.9 billion with the 15 percent “greenshoe”). The IPO was priced at HK$3.07 per share (or about 39.4 cents per share in US dollars). It closed its opening day at HK$3.54 per share, UP 15.3 percent from its initial offering price.  

 

That’s not bad for any deal, especially a jumbo IPO.

 

But stateside investors (Americans) shouldn’t come down on their friendly stockbrokers for not calling to see how many shares they wanted from the 48.4 billion shares of ICBC being offered. The deal wasn’t registered with the U.S. Securities and Exchange Commission, or with any of the 50 states. The various U.S. regulatory bodies have been known to frown on selling “unregistered” securities.

 

The REIT was Douglas Emmett (NYSE: DEI), a Santa Monica, California-based real estate investment trust, priced 66 million shares at $21 each to raise $1.39 billion, up from a filing of 55 million shares at $19 to $21 each. It closed its opening day at $23.65 and it closed on Friday at $23.93 per share, UP 14 percent from its initial offering price.

 

Before last week, the average opening-day gain for all IPOs was 9.74 percent and the performance of the two REITs priced previous to Douglas Emmett was an average opening-day LOSS of 4.05 percent.

 

From the troubled media industry came GateHouse Media (NYSE: GHS), a Fairport, New York-based publisher of locally based print and online media. The company prices 13.8 million shares at $18 each, up from a filing range of 11.5 million shares at $16 to $18 each. It closed its opening day at $21.17 and on Friday it ended at $22, UP 22.2 percent from its initial offering price.

 

Note: Both the Douglas Emmett and GateHouse IPOs increased the number of shares, but kept the offering price within their original filing ranges. Normally, the price range would be increased.

 

There was another surprise from last week’s IPO calendar.

 

Home Inns & Hotel Management (NADSAQ: HMIN), the Shanghai-based economy hotel chain (China’s answer to Motel 6), priced 7.9 million American Depositary Shares at US$13.0 each, up from a filing range of US$10 to US$12 per share. The IPO closed its opening day at $21.17 and closed on Friday at $25.44, UP 84.4 percent from its initial offering price.

 

The deal had been expected to do well in the aftermarket, but not as well as it did. (With apologies to Tom Bodett of Motel 6: “We’ll keep the red lantern lit for ya.”)

 

Hertz Global Holdings (NYSE: HTZ proposed), a New Jersey-based car rental provider, filed an amendment to price 88.3 million shares at $16 to $18 each to raise about $1.5 billion. The company will not receive any of the proceeds from the offering.

 

Hertz Holding Loan Facility will receive $1 billion “for the purpose of paying a dividend to the holders of our common stock and paying fees and expenses related to the facility” and “prior to the consummation of this offering, we intend to declare a special cash dividend, payable promptly following completion of this offering to holders of record of . . . in an amount of approximately $1.83 per share, or $426.8 million in the aggregate.”

 

In September 2005, Clayton, Dubilier & Rice, The Carlyle Group and Merrill Lynch Global Private Equity acquired Hertz from the Ford Motor Co. and will own about 72 percent of the outstanding shares after the offering.

 

And that’s after collecting over $1.4 billion in dividends.

 

Only a frenzied new-issues market can open the IPO window this wide to float a blockbuster deal like this.