New Oriental Education & Technology Group (NYSE: EDU), a Beijing-based educational services provider, priced 7.5 million shares at $15 each on Wednesday, Sept. 6. That was above its original price range of $11 to $13 per share. The IPO opened at $22 and closed its opening day at $20.88, UP 39.2 percent from its initial offering price.
You have to go all the way back to May 11 to find a better opening-day winner:
Basin Water (Nasdaq: BWTR), a California-based designer of underground water systems, priced 6 million shares at $12 each. That was above its original filing range of 5 million shares at $8 to $10 each. The IPO popped for an opening-day gain of 41.6 percent when it closed at $16.99 per share. Since then, the air — or maybe the water — came out of the stock. On Sept. 8, it closed at $7 per share, DOWN 41.7 percent from its initial offering price.
The 2006 Moonshot:
This brings up the big question: “What was the sharpest opening-day winner so far in 2006?” Answer:
Chipotle Mexican Grill (NYSE: CMG), a Denver-based operator of about 500 fast-casual, Mexican food restaurants, priced 7.9 million shares at $22 each on Jan. 25. That was above its original price range of $15.50 to $17.50 per share. The IPO closed its opening day at $44, UP 100 percent above its initial offering price. Since then, it sold as high as $67.77 per share on May 9 and closed at $49.34 per share on Aug. 31, UP 124.3 percent from its offering price.
It has been the only deal to score an opening day of 100 percent or better so far in 2006.
Early September pricings
When the New Oriental Education IPO was priced on Wednesday evening, Sept. 6, it was the earliest September pricing of an IPO since 1998. Bankers priced two deals back then. They were:
Diversified Senior Services (pink sheets: DISS), a Winston-Salem, North Carolina-based provider of senior housing services, priced 1.5 million shares at $5 each on Jan. 8, 1998. The IPO opened at $7 per share and never sold any higher. On Sept. 8, 2006, it closed at 2.25 cents per share, DOWN a whopping lot from its initial offering price.
RAIT Investment Trust (NSYE: RAS), a Philadelphia-based real estate investment trust, or REIT, priced 2.8 million shares at $15 each on Jan. 8, 1998. On Sept. 8, 2006, it closed at $28.42 per share, UP 89.5 percent from its initial offering price.
Now let’s take a look at the present.
Setting the Stage
This week, there is nothing on the IPO calendar. But the stage has been set for the fall season. Consider the following:
- On Jan. 1, 2006, there were 135 IPOs in registration looking to raise $22.9 billion, according to available reports.
- From Jan. 1 through Sept. 8, 134 IPOs were priced that raised $25.4 billion.
- On Sept. 8, 2006, there were 182 IPOs in registration looking to raise $29.7 billion.
There’s more.
The Nasdaq Composite Index closed on Friday, Sept. 8 at 2,165.79, DOWN 1.79 percent for the year. That isn’t going to light a fire under the IPO market. However, it was UP 7.20 percent from its 2006 closing low, set on July 21. That rebound and the date are what count.
Under normal conditions, it takes about six to eight weeks for the IPO calendar to come to life after the stock market bottoms out.
Eight weeks after the Nasdaq’s 2006 closing low on July 21st takes us to the week of Sept. 18. That week’s calendar has eight IPOs on the launching pad, looking to raise $2.17 billion.
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