Sunday 25 September 2016

US IPOs ready for market feeding frenzy in October

Elaine Taylor

Published 04/10/2015 | 02:30

Digicel Group, the mobile-services company owned by Denis O'Brien, plans to raise as much as $2bn on October 7 in what could be America's second-biggest IPO this year
Digicel Group, the mobile-services company owned by Denis O'Brien, plans to raise as much as $2bn on October 7 in what could be America's second-biggest IPO this year

After a modest quarter for US initial public offerings disrupted by August's soaring market volatility, several companies, including Digicel, First Data and Pure Storage, are on deck to go public in October, signaling that the pace may increase in the final quarter.

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Companies going public in the US from July through September raised about $6.1bn - the lowest volume in the third quarter since 2012, according to data compiled by Bloomberg.

That volume also reflects more than an 80pc drop from the year-earlier quarter, primarily because Alibaba raised a record $25bn in their listing last September. Houlihan Lokey, the boutique advisory firm, and high-end animal-food retailer Blue Buffalo Pet Products both tapped public markets in the three months through September. They were among 30-odd companies to go public in the period, the fewest for the third quarter in three years.

However, that lull may be over. There are 16 IPOs that have priced or are scheduled to price in the 30 days ending October 14, when First Data's offering is slated. That would make it the busiest month-long period since June. In what could be the biggest IPO of 2015, payments processor First Data is seeking to raise as much as $3.2bn.

Digicel Group, the mobile-services company owned by Denis O'Brien, plans to raise as much as $2bn on October 7 in what could be America's second-biggest IPO this year. Pure Storage, the number two seller of all-flash storage systems, is also marketing its initial offering and is scheduled to price its shares on October 6.

"As we look forward, there are a handful of headline transactions that will be some important barometers for the market," said Jeff Bunzel, managing director and head of equity capital markets Americas at Deutsche Bank.

How those offerings go, and how the stocks fare when trading begins will be an indication of investor sentiment after a cocktail of events fuelled uncertainty and volatility in US equity markets.

Those include concerns about the Chinese economy, fueling the August 24 market correction that sent the Standard & Poor's 500 Index tumbling 3.9pc for the day.

The Federal Reserve also delayed raising interest rates in September, keeping them at levels held since the depths of the financial crisis. The move raised questions about whether higher rates could rattle global markets when they do come.

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