Will Chello IPO strike a chord with investors?
Several companies going public this week hope to ride the recent recovery in the stock markets.
Six companies are expected to debut this week, raising a total of $931 million. Four of these companies, however, had previously been on the IPO calendar but either postponed or delayed their offerings in the face of extreme market volatility.
The Nasdaq's record-setting gain of 19 percent last week could provide a window of opportunity for some of the delayed IPOs, such as that of high-speed Internet service provider Chello Broadband.
Based in the Netherlands, Chello was scheduled to trade last week but pushed its IPO to this week.
"They started their road show late, so I won't worry about the delay," said Jeff Hirschkorn, senior IPO analyst with IPO.com. "There's nothing wrong with this deal, and it's expected to be hot."
Chello plans to offer 26.9 million shares between $11.88 and $15.33 per share. The company hopes to raise as much as $412.4 million based on the high end of its pricing range. The company will trade under the ticker "CHLO."
Richard Peterson, an IPO analyst with Thomson Financial/Securities Data, noted that Chello's underwriter, Goldman Sachs, was busy last week with ONI Systems--the only deal to price above its expected range.
"They may have wanted to put their focus on ONI and concentrate (this week) on Chello instead of diluting the deals," Peterson said.
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Other companies back on the IPO calendar include wireless phone service provider UbiquiTel, content company Urban Cool Network, and financial services site eChapman.com.
Analysts noted that eChapman has been in the pipeline for a while. "eChapman is getting long in the tooth," Peterson said.
The company, which is being underwritten by its parent, The Chapman Co., hopes to raise up to $23.8 million based on the high end of its $12 to $14 pricing range and 1.7 million shares it plans to sell. The company plans to trade under the ticker "ECMN."
eChapman offers online educational and lifestyle content as well as financial services. The company posted pro forma revenues of $10.5 million last year and a loss of $4.5 million.
UbiquiTel, an exclusive provider of Sprint PCS wireless services to four small and midsize markets in the West and Midwest, hopes to raise up to $145 million based on the high end of its $8 to $10 pricing range and 14.5 million shares it plans to offer. That's a 29 percent drop from its earlier pricing range of $12 to $14 a share.
Often, deals that fail to attract a strong following of investors or attempt to debut in a weak market will lower their pricing range to generate more interest in the deal.
UbiquiTel, which is being underwritten by Donaldson Lufkin & Jenrette, plans to trade under the ticker "UPCS." During the March quarter, the company generated pro forma revenue of $1.6 million and posted an operating loss of $2.5 million.
Urban Cool Network, which operates an online network that includes channels on the arts and literature, health and fitness, and sports, hopes to raise up to $22 million based on the high end of its $9 to $11 pricing range and 2 million shares it plans to offer. Kashner Davidson Securities is the lead underwriter; the stock will trade under the ticker "UBN."
The company has yet to generate revenues; it posted a net loss of $6.6 million in the period ended March 31.
Last week, optical network equipment maker ONI more than tripled in its debut. But the four other deals to price, or 80 percent of companies to float IPOs, priced below their initial ranges.
E-business software maker CrossWorlds Software, online financial services company Exult, pharmaceutical company First Horizon, and power company NRG Energy all priced their deals below their initial ranges.
This surpassed the number of IPOs to price below their ranges in May, when 19 out of 26 deals, or 73 percent, fell below their offer price, according to Thomson Financial's Peterson.
Despite the slump, analysts said they expect investment banks to keep putting IPOs on the calendar.
"If the markets continue (to rise), we may see some deals pushed up...If that happens, that's a very strong sign the IPO market is coming back," Peterson said.
IPO.com's Hirschkorn agreed. "We may start to see a lot of postponed deals start to come out because of the market's strength," he said, adding that bankers aren't likely to be deterred by last week's IPO performance.