Two VC backed companies filed S-1s last week.
Medidata Solutions
idea.sec.gov
OpenTable
idea.sec.gov
The headline overstates the case:
Prospects for IPOs Looking Good
Sunday, February 1, 2009; Page F02
The market for initial public offerings has been virtually shut down by the financial crisis, with exactly one deal getting done in five months. But in the past week, OpenTable and Medidata Solutions announced plans to go public, while Mead Johnson Nutrition, which filed for an IPO last year, pressed ahead with its planned offering.
Can you say recovery?
Well, probably not yet.
"A few deals filing is by no means an indication of shifts in market psychology," said David Menlo, president of research firm IPOfinancial.com.
But Menlo expects investors to get more comfortable taking risks on new stocks by the middle of the year.
What's more, he says, the prospects for the stock market performance of new issues are looking particularly good. That's because Wall Street firms -- which sorely need a win here -- will be motivated to trot out the highest quality deals they can, instead of indiscriminately bringing offerings just to score underwriting fees.
"Traditionally the underwriters would continue to press, pushing deals into the system, in an ever-weakening environment. That didn't happen this time," Menlo said. "Underwriters were very cognizant of the fact that the ground was crumbling beneath them."
As companies wait for the market to get back on its feet, they'll have to strike a balance between their desire to go public, and the terms under which they're willing to sell shares. In this kind of market, that may mean settling for a smaller pool of proceeds.
Mead Johnson, the maker of Enfamil infant formula, initially hoped to raise as much as $1 billion in an IPO. But the high end of the range of the expected proceeds got dialed back to about $690 million, when the company, a unit of Bristol-Myers Squibb, announced Wednesday that it plans to sell 28.8 million shares for $21 to $24 apiece.
If it's successful, Mead Johnson will be the biggest IPO since April. It also could be a harbinger for other companies waiting in the wings to sell stock.
-- Heather Landy
washingtonpost.com |
