09 Sep The IPO Window Cracks
SAN MATEO, CA – With the children now back in school and a general air of a “new year” upon us, we have the opportunity to demonstrate that the grownups have learned a few lessons from the pain of the economic crunch.
Over the next few weeks, a number of courageous souls will take their companies to the public market. We’ll see more IPO activity during this time period than we did through the previous few months.
2nd Swing, a gold equipment supplier, took a mulligan on its offering in June, but plans to tee up 2 million shares at $8 to $10 per in an effort to raise $20 million. Media company Journal Communications has its sights on $250 million, offering 17.2 million shares at $13.50 to $15.50 each. Rainier Pacific Financial Group is looking for $79 million in its bid to sell 7.9 million shares at $10 each. KNBT Bancorp is also on deck for a fall IPO, hoping to raise a whopping (by today’s standards) $311.7 million through the sale of 31.2 million shares at a price of $10 each.
And RedEnvelope, founded in an era of all things dot com, is offering 2.2 million shares at $12 to $16 per share in an effort to raise as much as $35 million. This will no doubt be the most closely watched by the investors in reformed dot com businesses.
If RedEnvelope can rise, phoenix-like, from the ashes of the Internet bust, then there is hope for the legions of companies that have been in a holding pattern since the IPO window slammed shut three years ago.
By boom standards, these are modest offerings. And they aren’t even technology companies. But even a small parade of IPOs in a stock market that has been more bull than bear may begin to look very attractive to investors – investors, mind you, that have had little daylight on the liquidity question and who have spent substantial energy in the effort to mollify antsy limited partners.
If the IPOs of September meet with even modest market approval, it will be the sign tech investors have been waiting for. If RedEnvelope can pull better than $12 a share, you can bet that a small army of tech companies will dust off their SEC filings and begin the march to the public markets. This is where we’ll see just how much ambition and greed were tempered by the downward spiral of the market. And not just on the part of venture investors who understandably are looking to clear something for their long-fallow investments. A phalanx of individual investors abandoned the stock market faster than you can say “plummeting Dow,” but sadly not fast enough to avoid the ravages of the market fall. These investors are tired of wringing their hands and are eager to see some positive numbers in their portfolios.
If conditions look ripe, then it just might be time for them to get back into the pool. Even a careful rollout of long-languishing tech IPOs, fueled by the anxious enthusiasm of side-lined traders, could make for a mini-boom in tech issues. It won’t be an astronomical, Netscape-
like offering that will set it off. The market remains too cynical and skeptical for that. Rather I predict we will see a steady stream of modest offerings, each spurring on the next. In short order, almost without meaning to, we’ll find ourselves on the slippery slope to exuberance – rational or otherwise. Just how slippery and sloping will depend on whether cautious optimism or pent-up demand win the day.
What’s your take on the IPO market? How do you plan to invest?
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Chris Shipley is the executive producer of NetworkWorld’s DEMO Conferences,Editor of DEMOletter and a technology industry analyst for nearly 20 years.Shipley has extensive experience in online publishing, having developed online content and communities on every major platform, including AOL and the Web. Before oining IDG, Shipley established a consulting practice to help Silicon Valley technology companies define their media strategies. Shipley is a frequent speaker at technology industry forums, and acts as an advisor toseveral startup ventures.
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