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The appetite for IPOs is also being driven by established companies buying back their own shares just as demand for stocks is rising, says Russ Koesterich, chief investment strategist for BlackRock. That buying has reduced the overall availability of shares in Roshe For Kids the market.
sales of new stock. But demand for more offerings depends largely on the health of the broader market, and after last week's sell off, the clamor from buyers may quiet down. (AP Photo/NYSE Euronext, Ben Hider, File)
Some companies delayed their IPOs last week as the stock market turned bumpy. Paycom Software, a human resources software company, and City Office REIT, a real estate investment firm for office properties, were expected to launch. But their IPOs didn happened and the companies are expected to try to complete them this week.
La Quinta and Ally were among 10 companies that raised $4.2 billion through IPOs last week, the third busiest for debuts in 2014. Another 12 companies are scheduled to launch stock this week.
AP Photo/NYSE Euronext, Ben Hider, File
FILE In this Wednesday, April 9, 2014 file photo released by the New York Stock Exchange, executives and guests of La Quinta Holdings applaud the opening bell in honor of the company IPO. So far in 2014, IPOs are having their best start to a year since 2000, with 89 companies raising $19 billion through Roshe Run Galaxy White
La Quinta priced its shares at $17 each, lower than its expected range of $18 to $21, which suggested less demand. The stock rose slightly in its debut Wednesday then fell the next two days to end the week below it original offer price. Ally, the largest IPO this year, priced its shares at $25 each, the bottom of its expected range of $25 to $28. The former financing arm of General Motors fell 4 per cent in its premiere Thursday, closing at $23.98. On Monday, both stocks ended below their IPO price.
of the market in the last one to two years, due to all the buybacks, Koesterich says. the IPOs are meeting a need for supply. in the S 500 spent $475.6 billion on buying their own stock last year, an increase of 19 per cent from 2012, according to data from S Dow Jones Indices. The strong pace has continued this year. Companies spent $129.4 billion on buybacks during the first quarter.
IPOs are having their best start to a year since 2000. Eighty nine companies have raised $19 billion through sales of new stock so far in 2014, according to Dealogic. But demand for more offerings depends largely on the health of the broader market, and after last week sell off, Roshe Run On Feet Tumblr
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The FTSE Renaissance IPO index, which tracks the performance of new stock offerings for up to two years after their debut, surged 63.3 per cent last year. That rise was more than double the 29.6 per cent increase for the S 500 index. The IPO index is down 0.6 per cent this year, less than the broader market decline of 1 per cent.
Investors have been drawn to the market because it gives them more bang for their investment buck. Stocks have looked more attractive than bonds, after bonds lost 0.4 per cent last year, according to data from Barclays.
The IPO market started recovering last year after being in the doldrums following the financial crisis and Great Recession. The Standard Poor 500 index surged almost 30 per cent in 2013. That helped boost the appetite for new stocks as investors looked for ways to beat the market. Twitter, hotel group Hilton Worldwide and sandwich shop chain Potbelly were some of the big name IPOs in 2013. exchanges last year, the best for IPOs since 2007. Prior to that, that top year was 2000, when companies sold $104.5 million of stock at the tail end of the internet bubble.
Andy Sanford, head of Wells Fargo Securities equity capital markets group, who helped launch La Quinta, says that companies will have to lower their expectations on prices, although he thinks there is still good demand for new stocks.
the clamour from buyers may quiet down.
have been a place where investors have been able to get higher returns than the broader market, Sanford says.
Hot IPO market may face cooler reception as stock swings make investors nervous
Last year robust IPO market carried through to the start of this year. But signs of weakness have appeared as stocks become more volatile. Rattling the market are worries that technology and biotechnology companies have become overpriced after huge gains in 2013. The S 500 is down more than 2 per cent this month after rising a combined 5 per cent in February and March.
Auto financing company Ally Financial and hotel operator La Quinta Holdings had lukewarm receptions for their IPOs last week.
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