A Tepid Reaction in the IPO Market

The IPO market is heating up again with 7 companies making their market debut today, but a tepid reaction to the new offerings has set the issues at the low end or even below the expected price ranges. The deals to watch for today are two biotech companies Alimera and DynaVox, energy companies Global Geophysical and alternative energy Codexis, technology companies Mitel Networks and supply chain software company SPS Commerce, and the investment management company THL Credit. Also one more company Excel Trust a financial REIT is expected to price this week under ticker EXL.

The last time more than 7 IPO’s hit the market on a single day was on December 15, 2004 when seven out of nine IPOs closed above their initial offering prices, as per IPO Scoop.com. Yet, 5+ years later this wave of new IPOs struggled to find the right pricing with more than half of the companies expected to trade today pricing below their anticipated price range. Since the start of the year, a total of 36 companies including today’s offerings have generating $5.4 billion in proceeds and 16 issues have priced below their expected range. Of the remaining twenty, 16 were within range, and only 4 priced above the anticipated range as per Renaissance Capital.

Here are todays' IPOs and sorted by their greatest price differential in percentage terms:

  • Alimera priced at $11/share, which is 35% below the expected highest price in the range of $15-$17
  • Mitel Networks priced at $14/share, which is 30% below the expected highest price range of $18-$20
  • Global Geophysical priced at $12/share, which is 29.4% below the expected highest price range of $15-$17
  • THL Credit priced at $13/share share, which is 13% below the expected price of $15
  • Codexis priced at $13/share at the low end of the range of $13-$15
  • Dynavox priced at $15/share at the low end of the range of $15-$17
  • SPS Commerce priced at $12/share at the mid-range of $11-$13

The improved market conditions have led to a total of 89 deals in the past 12 months with an industry breakdown as follows: 23% Financial, 21% Technology, 15% Healthcare, 9% Consumer, 9% Energy, 8% Materials, 7% Business Services, 4% Capital Goods & Services, 3% Transportation, and 1% Communications. (As per Renaissance Capital). Also this month is proving better than last April where a total of 9 IPOs have priced so far versus only 3 in 2009. See below for the 10 Best performing IPOs priced this year.

Top 10 Best Performing IPOs of 2010

Offer Date
Offered Price
Closing Price 4/21/10
Total % Return
CELM China Electric Motor 1/28/2010 4.5 7.9 75.56%
PRI Primerica 3/31/2010 15 23.69 57.93%
PDM Piedmont 2/9/2010 14.5 19.45 31.14%
HTHT China Lodging Group 3/25/2010 12.25 16.03 30.86%
GRM Graham Packaging 2/10/2010 10 13.02 30.2%
FNGN Financial Engines 3/15/2010 12 15.51 29.25%
IRWD Ironwood Pharma 2/2/2010 11.25 14.34 27.47%
MXL MaxLinear 3/23/2010 14 17.37 24.07%
GNRC Generac Holdings 2/10/2010 13 15.31 17.77%
SYA Symetra Financial 1/21/2010 12 14.06 17.17%