Invesco Mortgage Capital Inc. (NYSE:IVR), a real estate investment trust, or REIT, that began trading on the New York Stock Exchange Friday morning, marks the fourth company to go public this week. It's been more than a year since four companies went public in the same week, fueling hopes the IPO market may be heating up at last.
Invesco Institutional Inc., a unit of Invesco Ltd., will manage Invesco Mortgage Capital, which expects to raise $195.5 million from the IPO, assuming underwriters' options are exercised. The Atlanta company offered 8.5 million shares, scaled back from the 20 million shares it planned to offer in a previous filing. Priced at $20 per share, it opened at $19.8. (Subscribers to The Deal Pipeline can read more here.)
On Wednesday, two Chinese companies went public on the NYSE. Shanghai chemicals maker Chemspec International Ltd. (NYSE:CPC) raised $73 million. On its first day of trading, the stock closed pennies above its $9 pricing. Duoyuan Global Water Inc. (NYSE:DGW), a Beijing supplier of water treatment equipment, raised $88 million and fared well, closing its debut at nearly $22, significantly above its $16 pricing.
And on Thursday, Medidata Solutions Inc. (NASDAQ:MDSO) debuted. The New York provider of services for conducting clinical research trials raised $88 million in selling 6.3 million shares priced at $14 per share. The stock opened at $18 per share on Thursday and closed its first day of trading at $17. (Subscribers to The Deal Pipeline can read more about the IPOs of Medidata, Chemspec and Duoyuan here.)
The last time there was this much IPO activity was the week of April
21, 2008, when American Water Works Co. (NYSE:AWK), Intrepid Potash Inc. (NYSE:IPI), Hatteras
Financial Corp. (NYSE:HTS) and Whiting USA Trust I (NYSE:WHX) all began trading.
Medidata's IPO was of particular interest to venture capitalists, some of whom say the end of the IPO drought is near. There were no venture-backed IPOs in the fourth quarter of last year or the first quarter of this year. With Medidata, the second quarter has already seen three venture-backed IPOs. In May, restaurant reservation service OpenTable Inc. (NASDAQ:OPEN) and network management software company SolarWinds Inc. (NYSE:SWI) began trading.
Medidata proved a profit bonanza for its VC backers -- Insight Venture Partners, Milestone Venture, Stonehenge Capital, GlobalNet Partners and Silicon Alley Ventures. The firms made a combined $24.4 million profit in just the first day, with Insight's 33% stake giving it a $16.3 million profit.
Nevertheless, venture capitalists continue to take a wait-and-see approach to the IPO market.
"When we start to see more companies like SolarWinds going to public markets, then we'll have some indication that the financial communities are ready to invest in growth," says David Hornik, a partner at August Capital Management LLC, whose new $650 million balanced-stage fund is the biggest venture capital fund raised this year.
Hornik says:
There are lots of interesting companies ready to go public. They have tens of millions of dollars in revenue. They're cash-flow-positive. They've built big businesses over the last decade. When they start coming to market, then we'll know we've at least turned a corner and are trying to make our way back up the hill.
In the meantime, more IPOs are coming. Next week, venture-backed LogMeIn Inc. is planning to raise $100 million, offering 6.7 million shares at a price range of $14 to $16. Backers include Prism Venture Partners, Polaris Venture Partners, Technologieholding Central and Eastern European Funds, Integral Capital Partners and Intel Capital. It expects to trade as LOGM on the Nasdaq. - Mary Kathleen Flynn, with additional reporting by George White
