Now that Alibaba's record-breaking offering is out of the way, global markets are gearing up for a raft of new recruits. Another wave of initial public offerings (IPOs) is building this week.
Reuters notes a wave of 12 new flotations expected in China this week. In London, several big names may go public shortly, including shoemaker Jimmy Choo, and home builder Miller.
The test for the broad IPO group will be Rhode Island based regional bank Citizens Financial, a spin off of Royal Bank of Scotland, which will likely be the second-largest IPO of the year after Alibaba.
The test for tech will be CyberArk (CYBR), looking to raise 5.4 million shares at $13–$15. This is an Israeli cyber security company, and while it is a small deal we have not seen a tech deal in a while. The last one was MobilEye (MBLY), another Israeli firm that specializes in collision detection, which debuted July 31, priced at $25, and is up 91 percent since then.
With Citizens Financial and CyberArk, a big test looms for the U.S. IPO market, with a whopping twelve IPOs scheduled for next week. These include:
2) Grupo Aval (AVAL), Colombia's largest bank;
3) two oil & gas plays, CONE Midstream Partners (CNNX) and Vantage Energy (VEI);
4) Travelport Worldwide (TVPT), a travel e-commerce company;
5) Atento (ATTO), a Luxembourg-based company controlled by Bain that runs call centers and other customer outreach platforms; and
6) Smart & Final Store, a high-end food retailer that is aiming to raise nearly $200 million.
If all these price within their ranges and trade well, then we can discount the so-called Alibaba effect on the IPO market.
These are large deals as well. The average IPO floats anywhere between $100 and $200 million, but look at the size of these deals:
Citizens Financial $3.3 billion
Grupo Aval (AVAL) $1.1 billion
Vantage Energy $600 million
Travelport Worldwide $450 million
Smart & Final Stores $175 million
Altogether, we are talking about roughly $7.5 billion in fresh stock coming to market. While that's not as much as Alibaba's $20 billion deal, it is a huge amount to collectively dump on the market a few days after one of the biggest IPOs of all time.
Chinese shares fell sharply on Monday, with the dropping 1.7 percent, down 1.4 percent and Taiwan down 1.1 percent.
Finance Minister Lou Jiwei, speaking at the Group of 20 (G20) meeting, noted that stimulus measures brought many problems, including growing local debt. He implied that no major stimulus program would be forthcoming.
HSBC flash manufacturers managers index (PMI) is expected tomorrow. Japan's was also down 0.7 percent as the government indicated they would raise the consumption tax yet again this year, as already announced, despite evidence it is slowing the economy.