Investors Favor Recent IPOs

Yordanka
26 Nov, 2005
New York City

Three deals debuted in a quiet IPO week. Brookdale Senior Living began its first day of trading with 50% gains, while chemicals producer Tronox ended slightly higher. The third IPO from gas-drilling contractor Union Drilling also finished a bit higher, while the offering from Actions Semiconductor was postponed indefinitely.

194 initial public offerings have been priced so far this year and as of this Friday, Nov 25, 2005:

- 113 IPOs are currently trading above initial offering price;
- 77 are trading below the offering price;
- and 4 are trading at their offer price.

A total of 3 IPOs were priced and 4 companies filed to go public during the week of November 21st, 2005. There are no deals scheduled to be priced during the coming week.

IPO PERFORMANCE

Brookdale Senior Living Inc. ((BKD)) priced 11.7 million shares at $18 per share on Monday, at the midpoint of an estimated range of $17 - $19 at filing. The deal is worth $211 million.

Goldman Sachs was the lead manager on the deal, and Lehman Brothers, Citigroup and UBS Investment Bank were acting as co-managers.

The Chicago-based company operates assisted-living and independent-living facilities for the elderly.

The last time Brookdale reported net income was in 2002. So far in the first nine months of 2005, the company has posted a loss of $26.3 million, compared with a loss of $3.32 million in the same period a year ago.

Brookdale Senior Living shares ended the week at $25.65 on the New York Stock Exchange, up 35% from its IPO price.

Tronox Inc. ((TRX)) priced 17.5 million shares at $14 also on Monday, at the low end of a reduced price range of $14 - $16. The deal is worth $244.7 million.

Tronox cut its price forecast from an earlier range of $18.50 - $20.50 earlier on Monday.

Lehman Brothers and J.P. Morgan were the lead underwriters on the deal.

The Oklahoma City-based company, which makes the pigment titanium dioxide, is currently owned by Kerr-McGee Corp. ((KMG)).

The company began to show a profit in 2005 after years of losses, posting $12.6 million in the first nine months of 2005, compared with a loss of $127.2 million in the same period a year ago.

Investors haven't been eager to buy offerings in the cyclical chemical industry lately, with two that debuted in August – Rockwood Holdings ((ROC)) and CF Industries Holdings ((CF)) – still trading below their IPO prices.

Tronox’s stock ended the week at $14.12 on the NYSE, 0.9% above its offer price.

Energy exploration company Union Drilling Inc. ((UDRL)) priced 8.8 million shares at $14 per share on Monday, below an estimated filing range of $16 - $18. The deal is worth $123.2 million.

The company is offering half the shares, with the rest coming from selling shareholders.

J.P. Morgan and Jefferies were the lead underwriters on the deal.

Union Drilling specializes in unconventional gas formations in the United States.

Energy-related IPOs had been sure bets earlier this year as oil and gas prices were higher, but recent lowering in commodities prices is slowing IPO demand.

Union Drilling’s stock ended the week at $14.66 a share on Nasdaq, up 4.7% from its offer price.

LATEST FILINGS

Personal protection equipment maker Aearo Technologies ((AER)) registered for an initial public offering on Tuesday. The Indiana-based company generated $423 million in sales with a gross margin of 48.8% for the year ended September 2005. Bear Stearns, Banc of America and Deutsche Bank will be the underwriters on the deal.

Coal limited partnership Alliance Holdings GP ((AHGP)) registered for an initial public offering on Tuesday. The company that will own the general partnership interests of publicly traded coal limited partnership Alliance Resource Partners. The Tulsa, Oklahoma -based company plans to offer 11.0 million units. Lehman Brothers will manage the deal.

Real estate investment trust Taberna Realty Finance Trust ((TBR)) registered for an initial public offering on Wednesday. Friedman Billings, Piper Jaffray and Flagstone Securities will manage the deal.

Oil and natural gas producer EXCO Resources ((XCO)) filed for an initial public offering with the SEC on Wednesday. JP Morgan, Bear Stearns and Goldman Sachs will underwrite the offering.