Could Slow Start To IPOs In 2016 Be Beginning To Thaw?

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.