IPO market has biggest launch day since 2007
This is a big day for initial public stock offerings, as five new issues begin trading -- the most for a single session since Nov. 15, 2007, according to ipohome.com.
But the reception for the stocks is a mixed bag.
The standout is A123 Systems Inc., a venture-capital-backed maker of battery systems that some investors believe could help further the development of the electric car market.
The company’s shares, priced at $13.50 on Wednesday, rose as high as $20.20 on their first day in the market, and were trading at $19.97 about noon PDT, a 48% gain from the offering price.
A123, founded in 2001, is totally speculative: It has yet to turn a profit and it faces huge development costs. But investors are being lured by some big potential numbers far in the future.
From Bloomberg News:
The global market for electric and hybrid electric vehicles was forecast to surge to $21.8 billion by 2015 from about $31.9 million this year largely because of government incentives, according to analysis by A.T. Kearney.
A123 last month was awarded $249 million in federal stimulus grants out of $2.4 billion the Obama administration is spending on electric vehicle development. Recipients of the grants agreed to match the federal investments.
The reception for A123’s IPO will be cheered in Silicon Valley because it raises hopes for other technology start-ups that would like to tap the public market.
The other four IPOs that began trading today:
--- Artio Global Investors, the U.S. money management unit of Switzerland’s No. 3 bank, Julius Baer Holdings. The company sold 25 million shares at $26 each. The stock was trading at $27.12 around noon PDT.
--- Vitacost, an online vitamin retailer. It sold 11 million shares at $12 each. The stock was trading flat.
--- Colony Financial and Apollo Commercial Real Estate Finance, two real estate investment trusts that plan to invest in troubled commercial real estate debt. These offerings struggled just to get to market this week, and had to slash the size of their deals in half, as I noted in this post Wednesday.
Investors still paid too much, apparently: Both stocks are trading lower. Colony has fallen to $19.49 from its IPO price of $20; Apollo is faring worse, trading at $18.76, also down from an IPO price of $20.
Foursquare Capital, a similar REIT that was planning to price its IPO today, has postponed the deal -- no doubt because of the poor reception for Colony and Apollo.
-- Tom Petruno
Image: One of A123's lithium ion batteries for automotive applications. Credit: A123 Systems