Since Labor Day, three deals have appeared on the IPO calendar, according to Wall Street syndicate desks. They were Fluidigm, Safety-Kleen and CapitalSource Healthcare. And each was postponed “due to market conditions.”
The markets
The IPO market flies on two wings – one is the underlying stock market and the other is a company’s industrial sector. And both wings have to be flapping for an IPO to be launched. If not, you can expect the deal to be pulled from the IPO calendar with the explanation: “postponed due to market conditions.”
Let’s take a closer look at the IPOs that have fallen by the wayside since Labor Day and how market conditions have affected each. We’ll start with the most recent.
CapitalSource Healthcare REIT (NYSE: CHR proposed) (quote, news & chart):
On Aug. 6, 2008, CapitalSource filed for an IPO to raise $345 million. Based in California, the company is a newly organized real estate investment trust, or REIT, investing in income-producing healthcare-related facilities, such as skilled nursing facilities.
On Oct. 6, CapitalSource set proposed pricing terms to offer 14 million shares at $18 to $21 each to raise $273 million, according to the U.S. Securities and Exchange Commission filings, and set its pricing date for the evening of Wednesday, Oct. 15. On Oct. 15, the deal was postponed “due to market conditions.”
And now the markets:
On Oct. 6 (the day CapitalSource announced its proposed pricing terms):
The Nasdaq Composite Index closed at 1,862.96.
Dow Jones U.S. Real Estate Investment Trusts Index (see: Chart) closed at 84.59.
On Oct. 15 (the day the deal was postponed “due to market conditions”):
The Nasdaq Composite Index closed at 1,628.33, DOWN 12.6 percent from its Oct. 6 close.
Dow Jones U.S. Real Estate Investment Trusts Index closed at 67.35, DOWN 20.4 percent from its Oct. 6 close.
Fluidigm (GMS: FLDM proposed) (quote, news & chart):
On April 14, Fluidigm filed for an IPO to raise $86.3 million. Based in San Francisco, the company is a developer of integrated fluidic circuits to automate drug development and other life sciences research.
On Sept. 5, Fluidigm set proposed pricing terms to offer 5.3 million shares at $14 to $16 each to raise $79.5 million. It also set a pricing date for the evening of Sept. 18. It didn’t make it out the door. The deal was rescheduled for Monday, Sept. 22, and postponed on Sept. 25. It was withdrawn on Sept. 26.
And the markets:
On Sept. 5 (the day it announced proposed pricing terms):
The Nasdaq Composite Index closed at 2,255.88.
Dow Jones U.S. Medical Instrument Index (see: Chart) closed at 558.57.
On Sept. 25 (the day the deal was postponed):
The Nasdaq Composite Index closed at 2,196.57, DOWN 2.6 percent from its Sept. 5 close.
Dow Jones U.S. Medical Instrument Index closed at 550.14, DOWN 1.5 percent from its Sept. 5 close.
But the market’s real story started on Aug. 22 when the Medical Instrument Index closed on its recent high at 587.21 and the Nasdaq Composite at 2,414.71. By Sept. 25, about a month later, the Medical Instrument Index was DOWN 6.3 percent and the Nasdaq Composite was DOWN 9.9 percent.
To get off the launching pad, you need the wind at your back, not in your face.
Safety-Kleen (NYSE: SK proposed) (quote, news & chart):
On May 1, Safety-Kleen filed for an IPO to raise $300 million. Based in Texas, the company is a provider of used oil re-refining and recycling and parts cleaning services.
On Sept. 9, Safety-Kleen set proposed pricing terms to offer 21.9 million shares at $15 to $17 each to raise $350.4 million. It also set a pricing date for the week of Sept. 29. The deal was postponed on Oct. 2.
And the markets:
On Sept. 9 (the day it announced proposed pricing terms):
The Nasdaq Composite Index closed at 2,209.81.
Dow Jones U.S. Waste & Disposal Services Index (see Chart) closed at 113.56.
On Oct. 2 (the day the deal was postponed):
The Nasdaq Composite Index closed at 1,976.72, DOWN 10.5 percent from its Sept. 9 close.
Dow Jones U.S. Waste & Disposal Services Index closed at 102.39, DOWN 9.8 percent from its Sept. 9 close.
Once again, it was a case of the wind in the IPO’s face.
Of course, there are other times you’ll see an IPO postponed “due to market conditions” and the stock market is soaring. When this happens, what the bankers really mean: “Nobody wants this dog at any price!”