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Offerings Aren't Stunned by Rout |
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Perfect World Climbs 28%, BladeLogic Surges 47% |
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Wall Street Journal online, By Yvonne Ball |
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Volatile stock markets couldn't slow a surging new-issues market as three offerings racked up swift gains last week, capping off another strong month for initial public offerings. |
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As stocks fell sharply last week amid housing and credit-market concerns, Chinese online game company Perfect World Co. soared 28% on its first day of trading on the Nasdaq Stock Market on Thursday. The previous day, automation-software firm BladeLogic Inc rallied 47%. And on Friday, as markets remained turbulent, Canadian athletic-apparel company lululemon athletica inc. surged 56%. |
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While some offerings stumbled in July -- such as high-profile offerings from MF Global Ltd., the brokerage arm of London's Man Group PLC, and online travel company Orbitz Worldwide Inc. -- the strength amid tumult shows investors remain willing to back financially sound companies. |
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"Their performance, despite the overall market, shows investors are ravenous for top-line revenue growth and profitable companies," says Francis Gaskins, president of research site IPODesktop.com. "It's been a very strong six months for the IPO market and as long as the Nasdaq doesn't correct itself too much, we're going to have a strong rest of the year." |
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Eight public offerings last week took the number of debuts in July to 19, compared with 10 in July 2006, according to data tracker Dealogic. It lifts the number of IPOs this year to 127 -- excluding real-estate investment trusts and special-purpose acquisition companies. That total is 27% more than this time last year. |
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MF Global and Orbitz stole the headlines midmonth, but they were among the more poorly performing IPOs. |
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MF Global slumped 8% on its trading debut after pricing well below its proposed range amid fears of financial-sector exposure to the subprime-mortgage sector. Investors also distanced themselves from loss-making Orbitz, which was taken public by private-equity firm Blackstone Group LP less than year after it was bought. The stock slumped 3.3% on its first day of trading after the IPO priced below the estimated range of $16 to $18 a share. |
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But investors cheered on technology IPOs, which accounted for seven of the month's 19 deals. |
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They were well rewarded with data-warehouse company Netezza Corp., which along with BladeLogic and lululemon, was one of the month's best IPOs. Netezza soared 45% on its first day of trading on July 19. |