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Groupon opens up 40% post-IPO after increasing deal size

07 ноября 2011

Daily deals website Groupon Inc. enjoyed a trading pop on its IPO Friday, paving the way for more new stocks to launch in the weeks ahead.

The Chicago-based company's stock closed at $26.11 a share on the Nasdaq, up 30.6% from its initial-public-offering price of $20. It sold 35 million shares, five million more than originally planned, at a price above its expected range of $16 to $18.

"This is good. This IPO sends a clear signal to the people at Zynga and Facebook. The signal is that it's time to move forward," said Ben Holmes, president of IPO research firm Morningnotes.com.

Online games developer Zynga Inc., which registered to go public in July, is expected to price before the end of the year. Social media giant Facebook Inc. hasn't yet filed for an IPO, but is widely expected to go public in 2012.

Though Groupon's valuation of $12.66 billion is below the $15 billion to $20 billion that it originally projected, the deal is still considered a success for Groupon and its bankers. They were able to bring to market an unprofitable company that was dogged by criticism and negative press during the months leading up to its launch, and they did it during a time of high broader-market volatility, which makes accurate pricing difficult.

"Since LinkedIn came public in May, this is the most-watched IPO to come down the pipeline," said Lee Simmons, IPO industry specialist with Dun & Bradstreet."Doing well will get some buzz rolling again in the IPO market."

Groupon's trading gains aren't stratospheric, compared to the 135% pop that Chinese Internet stock Qihoo 360 Technology Co. Ltd. experienced in March, but it is the best showing since tea retailer Teavana Holdings Inc. gained 64% in July. July was the last normal month in the U.S. IPO market before a wave of negative macroeconomic news sent stocks on a volatile downward ride beginning in August; the IPO market has since slowed to a crawl as a result.

If Groupon can hang on to its gains and major U.S. stock-market indices don't take a prolonged nosedive, the stage is now set for a modest pickup in IPO issuance through the end of the year.

Bankers are gearing up to bring a total of a dozen IPOs public in the U.S. in November, before the U.S. Thanksgiving holidays, and then aim to price as many as eight to 10 more--if the overall environment holds up--in early to mid-December. Among those expected before the end of the year are local business-ratings website Angie's List Inc. and Zynga.

Although this level of anticipated IPOs is meager for November and December under normal market conditions--in 2007, there were sometimes 10 to 12 deals in a single week--it represents a leap forward for the current market, which saw only two deals per month in August and October, and none in September.

Strong stock-index gains in October set the stage for bankers to consider rolling out some IPOs, though continued volatility and macroeconomic issues such as the European debt crisis still weigh on their ability to price new deals.

Groupon is the first deal to price above range and trade higher since July, when C&J Energy Services Inc. priced above its expected range and gained 5% during its debut. Since then, no offering has priced within range and then gone on to make a gain, although two deals that cut their prices last month--those of Ubiquiti Networks Inc. and Zeltiq Aesthetics Inc.--enjoyed first-day gains of 16.7% and 19.2%, respectively.

Demand for Groupon's offering was strong, with high levels of investor attendance at its marketing road shows. Bankers designed the deal to play on that demand, offering just 5.5% of Groupon's outstanding shares to the public, excluding an overallotment option that could add another 4.5 million shares to the deal if it gets exercised. That percentage is a mere sliver that created scarcity in the allocations that buyers received.

Also trading for the first time Friday was an offering from fertilizer producer Rentech Nitrogen Partners LP, which declined slightly.

The company's stock closed at $19.85 a share on the New York Stock Exchange, down less than 1% from its IPO price of $20. It sold 15 million common units at the midpoint of its expected price range of $19 to $21.

Rentech Nitrogen, which was formed in July by "green" energy company Rentech Inc. to own and operate its fertilizer business, is coming public at a time when pricing for nitrogen fertilizer is high, and the cost of its core feedstock, natural gas, is low.

Rentech Nitrogen is structured as a limited partnership that will pay out its available cash in the form of a dividend. The dividend is estimated at $2.34 a share for the fiscal year that will end September 2012, delivering a yield of 11.7% at its IPO price.

However, the company warned that its dividend payouts will be volatile, in keeping with the cyclical and seasonal nature of its business. Unlike many other limited partnerships, such as energy companies, it isn't maintaining a minimum distribution, nor is it structured to pay out steady increases over time.

Morgan Stanley and Credit Suisse Group managed Rentech Nitrogen's offering. Morgan Stanley, Goldman Sachs Group Inc. and Credit Suisse Group managed Groupon's offering.

Источник: Total Telecom

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