After more than a month of mostly weak returns on initial public offerings, postponed deals and a highly volatile stock market, this week's seven scheduled IPOs may be lucky just to make it to market.
So far this month, four IPOs have been indefinitely postponed and one company withdrew its plans to go public. Two more companies canceled their IPOs in late April.
Of the 15 public debuts in April and May, nine companies have priced below or at the very bottom of expectations. Shares of 10 of those companies are currently trading below their offering prices, meaning two-thirds of initial IPO investors have lost money if they hung on to their stakes.
Not a great environment for IPOs. Only one company this week, Niska Gas Storage Partners LLC, is drawing an overall thumbs-up with its planned $367.5 million offering. That's because of the recent success of another natural gas storage company, PAA Natural Gas Storage LP, a former division of Plains All American Pipeline LP, said IPO analyst Scott Sweet of IPOBoutique.
Niska is the biggest independent operator of natural gas storage assets in North America.
The other deals will have to settle for "a wing and a prayer," said John Fitzgibbon, who tracks market chatter on upcoming IPOs at IPOScoop.com. "It's an ambitious calendar and they ran into something called Greece."
Debt problems in Europe, particularly in Greece, have driven stock markets lower across the globe. Stocks were highly volatile at the end of last week with the Dow down nearly 1,000 points on Thursday alone before recovering most of its losses. In an effort to soothe panicky markets, the 16 countries that use the euro and the International Monetary Fund agreed this weekend to create a nearly $1 trillion rescue fund to support European nations burdened by heavy debt loads.
The recent declines are tamping down prospects for Express, one of the country's biggest clothing retailers, market watchers say. Express hopes to raise about $304 million this week.
The 30-year-old chain's 573 stores sell clothes aimed at men and women in their 20s. Express is going public after spending the past few years improving its marketing process, launching its online store and revamping its clothing offerings, shifting from a focus on work outfits to one centered on casual and party wear and jeans.
It reported net income of $75.3 million on revenue of $1.7 billion in the year ended Jan. 30. The Columbus, Ohio-based chain said on April 30 that it expected a key revenue measure to rise 10 percent to 12 percent in the quarter ended May 1, with net revenue growing 11 percent to 13 percent.
It plans to open about 30 new stores a year for the next five years as the retail sector recovers from the recession.
But a roadblock for investors may be Express' plans for its proceeds. Instead of using the IPO to grow the company, it plans to use nearly all the money to prepay debt and make payments to its private equity sponsor, Golden Gate Private Equity Inc., and its former owner, Limited Brands Inc. The San Francisco firm acquired its 75 percent stake in the chain from Limited Brands in 2007 for $485 million. Express has since paid more than $556 million to Golden Gate in dividends.
Golden Gate also plans to sell at least 3.8 million shares in the offering.
"The marketplace hasn't taken too keenly to private equity firms placing their deals on the public market," Fitzgibbon said. Invstors are suspicious that banks and companies are trying to overprice shares, analysts say.
Last week, snowplow maker Douglas Dynamics Inc., backed by Aurora Capital Group and Ares Management LP, priced 25 percent below its expected range. Warehouse real estate investment trust Americold Realty Trust, owned by Ron Burkle's Yucaipa Cos., didn't make it to market at all. In early April, shares of Metals USA Holdings Corp., taken public by Apollo Management LP, tumbled 8.6 percent in their first day of trading — after pricing above expectations. The stock is still more than 25 percent below its offering price.
Companies expected to go public this week are mobile navigation services provider TeleNav Inc., which faces tough competition from Garmin Ltd., and Chinese solar company JinkoSolar Holding Co. Ltd., which tried and failed to go public in February. Others include Noranda Aluminum Holding Corp., another metals processor brought to market by Apollo, loaded with $718 million in debt; trucking company Roadrunner Transportation Systems Inc., which is using all IPO proceeds to pare debt; and telecommunications provider Wave2Wave Communications.