The IPO Buzz: Required Reading

Some are calling a secondary deal an IPO, and an IPO a secondary offering. To tell the difference, investors need to flip through their preliminary prospectuses, or “red herrings,” and peruse the fine print.

 

STARLIMS Technologies (NASDAQ: LIMS proposed), an Israeli-based provider of laboratory information management systems (LIMS – as in its proposed trading symbol), plans to price 2.1 million shares at $13.50 to $15.50 each to raise $30.5 million.

 

Check this out in the software company’s prospectus: “Prior to this offering, there has been no public offering for our ordinary shares in the United States. (Note) Our ordinary shares are currently traded on the Tel Aviv Stock Exchange, or TASE. The last reported market price of our ordinary shares on the TASE on May 21, 2007, was New Israeli Shekels 54.91 ($13.73).”

 

Any investor can front-run the offering by buying stock in Tel Aviv before the ordinary shares are priced in New York.

 

B&G Foods (NYSE: BGS proposed), a Parsippany, New Jersey-based manufacturer and distributor of a portfolio of branded, shelf-stable food products, plans to price 13.9 million shares of Class A common stock at $12 to $14 each to raise $180.7 million. Its brands include Accent flavor enhancers, condiments, Cream of Wheat cereal and the Ortega line of enchilada sauces and other Mexican cooking products.

 

Now read this from the prospectus: “Our Enhanced Income Securities (EISs)™ are separately listed for trading on the American Stock Exchange under the trading symbol “BGF.” Each EIS represents one share of our Class A common stock and $7.15 principal amount of our 12.0% senior subordinated notes due 2016. As of May 8, 2007, 20,000,000 shares of our Class A common stock were outstanding, all of which were represented by EISs. Holders of our EISs have the right to separate the EISs into the shares of Class A common stock and senior subordinated notes represented thereby at any time.” On Friday, May 18, the EISs closed at $21.90 per unit.

 

The Class A shares are to be listed on the New York Stock Exchange after being priced. The EISs will continue to be traded on the AMEX.

 

In any event, none of the IPO handicappers (whose input makes up the SCOOP ratings) thinks either deal will produce a moonshot in the aftermarket.

 

The balance of the week’s IPO calendar doesn’t look all that exciting either — once again, according to the IPO handicappers. Here are the highlights:

 

 

Bankers hope to raise $1.47 billion.

 

Last week’s traffic produced a trio of winners. Two were expected to do well by the IPO handicappers, and they did not disappoint. And then there was a sleeper.

 

Here’s how the IPO pros’ top picks performed:

 

— TechTarget (NADSAQ: TTGT), a Needham, Massachusetts-based provider of specialized online content that brings together buyers and sellers of corporate information technology products, priced 7.7 million shares at $13 each on Wednesday evening. The IPO closed its opening day at $14.79 and ended the week at $15.07, UP 15.9 percent from its initial offering price.

 

— EnerNOC (NASDAQ: ENOC proposed), a Boston, Massachusetts-based provider of power solutions to manage electricity consumption, priced 3.75 million shares at $26 each on Thursday evening. That was above its $21- to $23-a-share filing range. The IPO closed Friday, its opening day, at $31.13, UP 19.7 percent from its initial offering price.

 

And what of the sleeper?

 

China Sunergy (CSUN), a Chinese solar company, priced 8.5 million shares at $11 each on Wednesday evening. That was above its $8- to $10-a-share filing range. The IPO closed its opening day at $16.56, and finished the week at $14.18, UP 28.9 percent from its initial offering price.

 

That surprised the handicappers.

 

But looking back at what could be an emerging IPO industrial sector –- Chinese solar companies — it shouldn’t have caught anyone off guard. Beginning with the December 2005 offering of Suntech Power (NYSE: STP), seven China-based solar companies have gone public in the U.S. markets, according to Securities and Exchange Commission filings.

 

On May, 14, five closed above their initial offering prices and the average gain for all seven was 61.4 percent.

 

In comparison, the Nasdaq Composite Index gained about 13 percent from Dec. 13, 2005, to the present.

 

That sets the stage for next week, May 28, when the LDK Solar (NASDAQ: LDK proposed) offering is on the calendar.

 

 

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