Two of the Three IPOs Trade Above Offering Price

Yordanka
27 Aug, 2005
New York City

The market for IPOs has cooled down after a burst in July and especially in the first half of August. Nevertheless, two initial public offerings received warm welcome and made double-digit gains in their debuts last week. There are no deals scheduled to price the week of August 29th.

143 initial public offerings have been priced so far this year. A total of 2 IPOs priced and 5 new filed the week of August 22nd, 2005. Of the total 143 pricings 86 are currently trading up, 35 are down and 22 are trading flat with their offer price.

Market activity is traditionally low during the Holiday season. Judging from the previous years, the IPO activity is likely to begin picking up again at the end of September.

IPO PERFORMANCE

Energy company Enterprise GP Holdings ((EPE)) priced its IPO of 12.6 million shares of common stock at $28 per unit, at the high end of the estimated range of $26-$28 a share, for total proceeds of $352.8 million.

The company’s common stock began trading on Wednesday on the New York Stock Exchange and surged more than 17% on the first day of trading.

The Houston-based company owns Enterprise Products GP, which is the general partner of Enterprise Products Partners LP., a midstream energy company that provides services to producers and consumers of natural gas, natural gas liquids and crude oil.

Energy companies have been among the top performers in the IPO market so far this year.

The underwriters were granted a 30-day option to purchase up to 1.62 million additional units
at the initial public offering price to cover excess demand. The deal's managers were led by Lehman Brothers and Citigroup.

The company’s shares gained 19.2% to close at $33.37 per share on Friday.

Also on Wednesday, concrete supplier Ready Mix Inc. ((RMX)) priced its offering at $11 per share. The company sold 1.6 million shares of common stock at the high end of its estimated $9-$11 range at filing.

Shares closed at $12.10 on NYSE, 10% above the offering price on the first day of trading.

Ladenburg Thalmann and Wunderlich Securities were the lead managers on the deal. Underwriters have an option to buy additional 232.5 thousand shares to cover over-allotments.

The Las Vegas-based company deploys a fleet of 146 mixing trucks and operates two ready-mix concrete plants in the metropolitan Phoenix area, two plants in the metropolitan Las Vegas area, and one plant in Moapa, Nevada. The company also operates a sand and gravel crushing and screening facility in Moapa. Ready Mix is a unit of Meadow Valley Corp.

The company closed at $12.6 per unit on Friday, up 14.5% from its IPO price.

LATEST FILINGS

Consumer audio and video products maker Directed Electronics ((DEI)) filed for a $225 million IPO on Wednesday. The Vista-based company posted $204 million in revenue during the 2004 fiscal year. Goldman Sachs and JP Morgan are slated as the managers on the deal.

Solar power equipment maker SunPower Corp. ((SPWR)), filed for a $115 million initial public offering on Thursday. For the first six months of 2005, the Sunny Valley-based company lost $13.8 million on revenue of $27.5 million, according to the filing. CS First Boston and Lehman will be the managers on the deal.

Fabless semiconductor supplier Passave, Inc. ((PSVE)) registered for a $90 million IPO on Thursday. For the twelve months ended June 2005, the Santa Clara-based company generated $39 million in revenue and $13 million in net income. Merrill Lynch will act as the lead manager and JP Morgan will be the joint lead manager of the offering.

Sports apparel developer Under Armour, Inc. ((UARM)) filed for a $100 million initial public offering on Friday. The Baltimore-based company posted $242 million in sales for fiscal year ended June 2005. Goldman Sachs will be the lead underwriter on the deal. It is anticipated that shares will be sold in the offering by the company and by certain stockholders.

Specialty retailer Dover Saddlery ((DOVR)) registered for a $40 million IPO on Friday. The Littleton-based company registered $30.6 million for the six months ended June 30, 2005. WR Hambrecht will be the lead manager on the deal as the company plans to use a Dutch auction to distribute shares.

There are no deals expected to be priced this week