IPO window begins to crack open with 4 offerings

Wed Jun 20, 2012 2:37am IST

Stocks

   

(Reuters) - After concerns about Europe's debt crisis froze the U.S. initial public offering market for a month, four companies, including high-profile enterprise software maker ServiceNow (NOW.N), have set their terms for IPOs likely to list next week.

The deals are likely to serve as a litmus test for investor appetite after an IPO drought gripped the end of the second quarter.

No companies have gone public since Facebook Inc (FB.O) IPO did so in mid-May. The social network raised $16 billion, but its shares have tumbled 16 percent to $31.91 from an offering price of $38.00.

"The decision for these companies to go out is a result of increasing market buzz in general," said Lee Simmons, industry specialist at Dun & Bradstreet. "That said, there's still some uncertainty out there. For every company considering going public, there are 10 that are pulling back the reins."

So far, 27 IPOs have priced during the second quarter in the United States, down 36 percent from a year earlier, according to IPO research firm Renaissance Capital and Hoover's.

ServiceNow, which expects to price its shares at $15 to $17, hopes to raise $186 million. Morgan Stanley (MS.N) is leading the offering in the bank's first IPO since it came under scrutiny after the Facebook deal.

Also setting pricing terms this week were Exa Corp (EXA.O), which makes performance simulation software for vehicle manufacturers and is looking to raise $75 million, and biopharmaceutical company Tesaro Inc (TSRO.O), which is looking to raise $81 million.

Natural gas company EQT Midstream Partners, LP (EQM.N) expects its shares to price between $19 and $21 as it looks to raise $250 million.

But while issuers appear to be dipping their toes back into the IPO market, it remains unclear whether investors will accept these deals.

"I'm skeptical about how these deals are going to be received as they do their road shows and whether or not their books are going to fill up," said Lee Graul, a partner in the capital markets practice at accounting firm BDO USA LLP. "Right now there seems to be a lot of money sitting on the sidelines saying: ‘When are these trials and tribulations going to be over?'"

Some analysts, however, are optimistic that these offerings could stimulate an otherwise moribund market.

"Most of the IPOs coming soon are small, but it's a sign that the markets can come back to life," said Morningstar analyst Jim Krapfel. "You only need one or two of these to get the ball rolling."

(Editing by Lisa Von Ahn)