Market Insider

IPO Market Shows Signs of Life

Karina Frayter, CNBC Markets Producer

After almost three months in hibernation, the initial public offerings market is coming back to life with a slew of new deals on the calendar.


There are currently 13 IPOs expected to price in the next two weeks, according to Renaissance Capital. That’s following recent well-received offerings from Groupon , Ubiquiti and Zeltiq .

“These successful debuts are positive indications that risk appetite is starting to thaw for IPOs, particularly those that are being priced attractively,” says Paul Bard, research director at Renaissance Capital.

Market volatility and economic uncertainty forced many companies to hold off on plans to go public, creating a massive backlog of IPOs. According to Renaissance Capital, there are over 209 companies in the U.S. IPO pipeline right now hoping to raise nearly $50 billion.

Francis Gaskins, president of research firm IPO Desktop, says the relative stability in the stock market is helping to revive the IPO activity. “The averages have hung in there so the window is opening.”

“For the remainder of 2011, there are really only two windows of opportunities to price — the next two weeks heading into Thanksgiving and the first two weeks of December — before the market closes for the holidays,” notes Bard.

Bankers, who saw revenue from deal fees take a hit as the IPO activity stalled, are also motivated to bring forward the deals.

“Because of the adverse developments in Europe and macro headwinds, the second half of 2011 has not panned out the way many bankers had hoped — so they are trying to salvage as much as they can in terms of completing transactions over the next month and a half,” says Bard.

Among the deals investors will be watching this week is an offering from database security firm Imperva. The Redwood Shores, Calif.-based company plans to raise $75 million by offering five million shares at a price range of $14 to $16.

“There is interest in this one, although income statement performance has been relatively flat the last four quarters, and it’s been losing about $3 million per quarter,” says Gaskins.

According to Imperva’s prospectus, its customers include four of the top five telecommunications companies, three of the top five commercial banks in the United States, over 150 government agencies and more than 100 Fortune 1000 companies.

Other deals scheduled to price this week are: Chesapeake Granite Wash Trust, HomeStreet, LRR Energy, and NewLink Genetics.

The biggest deal next week so far is Delphi Automotive, which once was the largest U.S. auto-parts supplier.

The company exited bankruptcy in October 2009 and now hopes to raise $554 million by offering 24.1 million shares at a price range of $22 to $24.

There are 18 underwriters on the deal, according to the SEC filing.

Delphi’s major stockholder Paulson & Co., John Paulson’s hedge fund, is looking to sell 20.6 million shares in the IPO. According to the prospectus, 100 percent of the IPO proceeds will go to Delphi’s shareholders.

Other deals for the week of Nov. 14 are rather small. Among them is local-business reviewer Angie’s List.

The Indianapolis-based company plans to raise $106 million by offering 8.8 million shares at a price range of $11 to $13.

Bard says investors, who have treated growth- and consumer-oriented offerings favorably, may find the Angie’s List IPO attractive. But Gaskins warns the company’s financials look very bad.

According to the prospectus, in 2010 and the nine months that ended Sept. 30, 2011, Angie’s List had revenue of $59 million and $62.6 million, respectively. In the same periods, company’s net loss was $27.2 million and $43.2 million. It has also incurred net losses since inception and had an accumulated deficit of $160.6 million as of Sept. 30.

Investors are also looking for social game developer Zynga to officially launch its IPO in the coming weeks. But so far it has not made its way on the calendar.

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