Market mixed for 3 IPOs; 2 cos. cancel deals
Friday, April 13, 2012
Initial public stock offerings faced a tepid reception Thursday during a volatile month for Wall Street.
Shares of Forum Energy Technologies Inc. rose 8.8 percent after the company’s IPO raised $378.9 million, but MRC Global Inc. ended almost unchanged and Oaktree Capital Group LLC slipped in its debut. Two other companies that expected to start trading Thursday, aluminum producer Aleris and solar company BrightSource, didn’t make it to market.
An improving stock market helps fuel demand for IPOs, which are considered riskier investments. But big swings in stock prices can dampen investors’ taste for newly public companies.
The Dow Jones industrial average jumped 271 points over Wednesday and Thursday, clawing back from a five-day decline that culminated in a 214-point loss for the Dow Jones industrial average on Tuesday. That losing streak wiped out more than half of the Dow’s gains during the first quarter.
Forum and MRC, both based in Houston, sell products to energy companies. Energy production is booming in the United States as producers use advanced drilling techniques to pull oil and gas from previously untapped underground reserves.
MRC’s IPO raised $477.3 million, and shares closed almost unchanged. Oaktree, a Los Angeles-based investment management firm, raised $380.2 million. Shares fell 1.4 percent.
The mixed bag of debuts follows a relatively strong first quarter for initial public offerings. There were more IPOs in the January-March period than there have been since the 2011 second quarter, Richard Peterson, credit analyst at S&P Capital IQ, said late last month. And companies that debuted in those months rose 13 percent on their first trading day, on average, the best performance since 2008.
Still, companies are not raising as much money — about $5.5 billion in the first quarter, less than half of the $13 billion that newly public companies pulled in during the 2011 first quarter, according to recent data from IPO research and investment firm Renaissance Capital.
Some companies were not able to raise any funds from investors this week. Late on Wednesday, the aluminum producer, Aleris Corp., postponed its initial offering and BrightSource Energy Inc. withdrew its IPO, citing “adverse market conditions.” The solar industry has suffered from a flood of cheap solar panels and declining incentive programs in Europe. Aluminum companies, meanwhile, are dealing with a global oversupply of the metal and weak prices.
In Thursday’s more successful deal, Forum and its shareholders sold 18.9 million shares at $20 each, the high end of the expected range. That suggested strong demand for the company’s shares. Forum, which provides equipment and services to oil and gas operators both onshore and at sea, plans to use net proceeds of about $258 million to repay debt.
Shares added $1.75 percent to close at $21.75. It listed on the New York Stock Exchange under the ticker symbol “FET.”
MRC, which sells pipes, valves and fittings to energy companies, primarily in the United States and Canada, and its shareholders sold 22.7 million shares at $21 each. That was the low end of the expected range, suggesting muted demand for its shares. MRC plans to use proceeds to repay debt. Trading on the NYSE under the “MRC” symbol, the stock edged up 4 cents to $21.04.
Oaktree’s $43 IPO price was also at the bottom of the company’s expected range of $43 to $46. Shares trading on the NYSE under the “OAK” symbol fell 61 cents to $42.39. That may not bode well for a rival waiting to go public, private equity firm The Carlyle Group. Carlyle filed for an IPO in September 2011.
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