General Motorsisn't the only IPO this week. In fact, it might not even be the most important one. Let's face it, GM is a unique situation. The government owns it, and it's obviously a mature brand and business.
There are at least six other IPOs scheduled to price this week, and some of them may give more insight into the near future of the IPO market.
So, let's expand the discussion, beginning with another well-known business and brand: Consulting firm Booz Allen Hamilton. It's importance centers on the fact private equity firm The Carlyle Group owns it, and with so many private equity firms waiting for the right time to bring companies to market, the marketplace is closely watching IPOs backed by private equity.
Carlyle took Booz Allen private in 2008 for $5.28 a share. The IPO is expected to price between $17-19 a share, nearly tripling the valuation—and profit—for Carlyle. On top of that, Carlyle will retain a 71 percent share in the firm, which focuses on government consulting work.
If this IPO does well, it might help embolden the private equity community, and there are some major names in the pipeline. Toys R Us is expected to price either late in 2010 or early in 2011. Hospital giant HCA might also have a multi-billion dollar offering, but it's had such success in the debt markets, there isn't as much pressure right now.
So, what else is coming down the IPO pipeline this week?
Caesars Entertainment, formerly known as Harrah's, is owned by Apollo and TPG. However, it's a little bit different story than Booz Allen Hamilton. Caesars has debt upward of $20 billion, compared to Booz's $1.5 billion. The balance sheet is not quite as healthy, but even still, Caesars is expected to raise $500 million at a range of $15-17 per share. The market cap will be around $5.5 billion.
Another interesting name to watch is LPL Holdings, which supports an independent network of about 12,000 brokers. The IPO could raise about $500 million, depending on where it prices in the $27-30 range. The company grew quickly during the financial crisis as brokers were laid off from big firms, but since the markets have stabilized, the firm's growth rates have slowed.
Aeroflex makes micro-electronics in defense and aerospace. Clients include Boeing , Cisco and Raytheon . This one appears to be on somewhat fragile ground. It was supposed to go public last spring but did not. Now, the expected amount to be raised is half the original amount. The company loses money, but did just report revenue growth of 20-percent.
If you want a China play, Bitauto has dynamic possibilities. It's a tech company that focuses on the internet, specifically websites related to the automotive industry. China is an exploding market for vehicles, and Bitauto's sites help the Chinese consumer shop for cars.
Then, there's pharma, where the two names pricing this week both were suspended IPOs. Zogenix initially tried to go public two years ago, and this time, it expects to raise approximately $80 million, which will be split between funding new drug trials and marketing.
The details on Anacor Pharmaceutical are somewhat similar. After registering an IPO in 2007, it pulled the offering in 2008 because of obvious market conditions. It's expected to raise an amount close to Zogenix's $80 million, and in terms of business prospects, the company does have relationships with big pharma players like Glaxo Smith Kline and Eli Lilly .
A few things to consider when analyzing the IPO market. The following companies have gone public this month:
- Complete Genomics
- Inphi
- Noah Holdings
- RDA Mircoelectronics
- Primo Water
- The Fresh Market
- Costamare
- SimoTech Energy
- SodaStream
- Xueda Education
Seven of the 10 are up since debuting. Only Complete Genomics, Costamare and SinoTech Energy are down, although SinoTech is down more than 30 percent. That means 70 percent are up, and two names—The Fresh Market, SodaStream—are up approximately 50 percent.
On the other side of the ledger, several names have withdrawn offerings in the last week.
So, when it comes to IPOs, it's definitely more active, yet market conditions remain fragile for some companies. Wave2Wave Communications and air conditioning company Goodman Global Group are examples of companies not ready to make the public plunge.
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