IPO Review For The First Half Of 2010

By Eric Fox | July 14, 2010 AAA

The initial public offering (IPO) market in the United States rebounded in the first half of 2010, and improved over the dismal levels a year earlier. The market managed to do this in spite of the sell off in the equity markets starting in late April.


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Statistics
There were 64 IPOs in the U.S. in the first half of 2010, raising approximately $9 billion in capital for these companies. This is compared to 14 deals that raised about $2.5 billion in the first half of 2009. The majority of these deals were in the technology, financial and energy sectors. (For a background on IPOs, check out our IPO Basics Tutorial.)

The Good
One of the best performing IPOs in the first half of 2010 was Tesla Motors (Nasdaq:TSLA), which was priced at $17 per share.

Tesla Motors, which makes a high profile electric car, moved 40% higher when the stock started trading, but investors fled quickly and the stock has settled back down, giving investors who bought at the IPO a return of approximately 18%.

Another home run for IPO investors was Primerica (NYSE:PRI), which is up 40% from its $15 offering price. Primerica markets life insurance and other financial products and services, and was offered to the public by Citigroup (NYSE:C).

The largest IPO year to date was for Oasis Petroleum (NYSE:OAS), an exploration and production company with properties in the Bakken area in North Dakota. The IPO raised close to $600 million, but the company only received $395 million because a large shareholder sold its shares to the public in the offering. Oasis Petroleum is up approximately 15% from its $14 offering price.

Another large offering that excited investors was CBOE Holdings (Nasdaq:CBOE), which is the owner of the Chicago Board Options Exchange. The company priced its 11.7 million share offering at $29 per share, which was at the top of the expected range.

The Bad
On the negative side, two of the worst performing IPOs year-to-date were China Hydroelectric (NYSE:CHC) and Alimera Sciences (Nasdaq:ALIM). Both stocks are down more than 40% from their IPO prices.

China Hydroelectric offered shares to the public in January 2010, and had so much interest that the company increased the size of the offering twice, from an original 3.1 million units to 6 million units. Alimera Sciences also raised its offering size slightly when the company went public in April, but priced below its expected range.

Bottom Line
Despite the recent correction in the stock market, the U.S. IPO market in the first half of 2010 managed a vast improvement over the dark days in 2009. (Learn more about IPOs in The Murky Waters Of The IPO Market.)

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