Most companies that have gone public this year are biotech firms and the first quarter marked the slowest start to IPOs since the last recession. In the current quarter, [could] the fact that companies outside of biotech are eyeing or marching through the IPO door… be a sign of a slow thaw? 

Written by MotifInvesting.com

Last month, Bats Global Inc. (BATS: BATS) raised $253 million in an initial offering that valued the company at $1.8 billion. Bats increased the deal’s size after demand for shares exceeded the 11.2 million originally offered by 20 times. After a mere dribble of initial public offerings in this year’s first quarter, the idea that one new issue priced its shares above its asking range then surged 20% in its first day of trading was welcome news for investors looking for a sign that the IPO market has started to thaw.

Bats shares closed Monday at $25.97, well above the stock’s $19 IPO price, helped by its first quarterly earnings report last week as a public company. It posted record first-quarter profit thanks to higher market volume and growing market share.2

IPO market a mixed bag so far

…Not every IPO has panned out as well as Bats, [however].

  • SecureWorks (NASDAQ: SCWX), Dell’s security spinoff and the first new tech issue of the year, sold 8 million shares at $14 each, below its plans to sell nine million shares for between $15.50 and $17.50 each.
  • Red Rock Resorts (NYSE: RRR) raised $531.4 million after its shares were priced at $19.50, the midpoint of its target range.
  • REIT MGM Growth Properties (NYSE: MGP), had a respectable IPO, closing at $22.90 Monday, up from its IPO price of $21, which was the high end of its target IPO price range. The biggest IPO of the year so far, MGM raised more than $1 billion.
  • American Renal (NYSE: ARA), which runs dialysis facilities, rose 21% on its first trading day from its IPO price of $22. Its shares closed $27.59 on Monday.
  • Chinese commodities brokerage Yintech Investment Holdings (NASDAQ: YIN) with an IPO price of $13.50 closing at $13.37 Monday and
  • Global Water Resources (NASDAQ: GWRS), which offered its shares at $6.25, was at $7.20.
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