For confirmation of these IPO facts of life, you have no further to look than the current new-issues calendar.
Last week’s calendar produced zilch – nothing was priced. This week, four flat deals are on the agenda. And next week, three IPOs are on tap that could create some excitement. (For details of those deals, see the final section of this column.) After that, the calendar is clean and green.
There is a reason for the three-week window.
If the bankers get too aggressive in seeding the calendar weeks in advance, the market could turn against them. In the past, it has done just that. Falling stock prices have brought the IPO Express to a standstill more than once.
When this happens, bankers are forced to delay or even postpone their IPOs “due to market conditions.” That sweeps demand off the table and the deal might have to be marked down. It becomes “damaged goods” looking for buyers.
Bankers have learned that when putting an IPO on the calendar with a pricing date, it doesn’t pay to get weeks ahead of the market.
A Lull in Late Winter
This brings us back to the present and the apparent slowdown in today’s IPO traffic.
Over the last several years, the mid- to late February slowdown has turned out to be a “seasonal factor.” Since 2003, the IPO traffic averaged 33 deals from the beginning of the year through mid-February, and averaged two or three deals from mid-February through the beginning of March.
One reason is that bankers have probably been advising their clients to wait until they get the year-end results in before going public.
Now let’s review the current situation: Last week nothing came to market. This week has four deals and next week has three deals.
This week’s IPO calendar has two pharmaceuticals and two “blank checks.” None are expected to light up the IPO scoreboard with fireworks in the aftermarket.
Packing a Punch
Next week is a different story. It appears the IPO calendar is coming to town with thunder in both fists. Consider the following:
Clearwire (NASDAQ: CLWR proposed) operates next-generation wireless broadband networks that offer fast, portable and affordable Internet service to over 206,000 subscribers. Clearwire’s service is available in Alaska, Hawaii, California, Idaho and eight other states, as well as in Belgium, Denmark and Ireland. Clearwire, founded by wireless pioneer Craig McCaw, plans to price 20 million shares at $23 to $25 each during the week of March 5.
It’s been touted on late night TV.
Sourcefire (NASDAQ: FIRE proposed) provides intelligence-driven open source computer network security solutions designed to detect and block hackers. It is best known for Snort, one of the industry’s leading open source intrusion detection and prevention initiatives. Snort was invented in 1998 by Martin Roesch, a software engineer who founded Sourcefire three years later. Its customers include over 25 of the Fortune 100 companies and over half of the 30 largest U.S. government agencies.
Sourcefire plans to price 5.77 million shares at $12 to $14 each during the week of March 5.
The back office of either of its joint-lead managers, Morgan Stanley and Lehman Brothers, could place all 5.77 million shares itself.
Xinhua Finance Media Limited (NASDAQ: XFML proposed) is a media firm providing business and financial news in China. The company has ties to Xinhua News Agency, the state-controlled news agency of the People’s Republic of China. The chairman of Xinhua Finance Media Ltd., according to its Web site, is Wu Ji Guang. Mr. Wu is also the president of China Media Development Shenzhen Inc., an investment holding company wholly owned by Xinhua News Agency.
Xinhua Finance Media Ltd. plans to price 23.1 million shares at $12 to $14 each during the week of March 5.
We’ve seen a few hot Chinese IPOs steamroll through the canyons of Wall Street since Labor Day.
Could this be the next?
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