The worst performing initial public offerings (IPO) that priced during the first quarter of 2010 were from a wide range of industries, including two companies based in China, and a couple of companies backed by private equity that were connected to the commodities or basic materials complex.
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The first quarter of 2010 was a strong one, and saw 27 deals priced with $4 billion raised in U.S capital markets. In the same quarter last year, only one deal was priced raising less than $1 billion. Although this quadrupling of capital raised might be encouraging, it is still far below the peaks reached in late 2007, when $22 billion was raised.
Worst of the Worst
The worst performing IPO that priced in the quarter was China Hydroelectric (NYSE:CHC), which fell 40% from its offering price of $14.80. China Hydroelectric has interests in 11 hydroelectric plants in China, including 10 of which the company owns 100%. The company ended up increasing the number of shares in the offering and the extra stock might have depressed the price in the aftermarket.
IFM Century 21 China (NYSE:CTC) also did not fare well, falling 18% from its $7 per share offering price. IFM Century 21 China started off weak, cutting the size of its offering and pricing at the lower end of its range. The company licenses the Century 21 brand name in China, where there are now 1,100 sales offices.
Crude Carriers (NYSE:CRU) does just what the name implies, as the company is in the business of shipping crude oil. Crude Carriers is using the proceeds from the offering and some additional capital to acquire three transport ships. The stock is off 8.5% from its IPO price of $19 per share. As demand for crude oil increases worldwide, this extra capacity may be needed.
Metals USA Holding (Nasdaq:MUSA) is one of the largest metals distributors in the U.S, and was almost completely owned by Apollo Management, the private equity firm, prior to the offering. The company was priced at $21 per share in April 2010, above its range of $20-22. Metals USA Holding is off 9% from its IPO. Maybe the poor return is an result of the underwriters being too aggressive on the pricing side.
Cellu Tissue Holdings (NYSE:CLU) is off 20% from its $13 offering price in January 2010. Cellu Tissue Holdings is headquartered in Georgia and makes tissue and other paper products at ten manufacturing facilities in the U.S. The company was also an offering from a private equity firm.
The Bottom Line
Although the market for initial public offerings was strong in the first quarter, not all stocks shared in gains as the market sold off many issues in the after market, including China-based and private equity offerings. (For related reading, take a look at IPO ETFs Inside And Out.)
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