The much-hyped American float of Groupon finally got away on Nasdaq last week. The initial public offering (IPO) is the biggest US internet firm flotation since Google raised $1.7bn in 2004, say Alistair Barr and Clare Baldwin at Reuters.com.
The internet voucher provider raised $700m and joins Nasdaq with a market capitalisation of nearly $13bn. Critics claim the stock is overpriced. “Its business model is questionable and its $28 share price insane,” says Lex in the FT. On the plus side, “the company believes in itself and has 95% of its skin in the game. Few can claim such an alignment with investors.”
Successful high-profile IPOs have been scant this year. In March Goldman Sachs and EQT were forced to pull the £1.6bn flotation of ISS in Denmark (expected to be one of the biggest in Europe this year) at the 11th hour. But the bankers had more luck with the US IPO of social networking site Linkedin, which raised $353m. The shares have so far remained above the float price of $45, although they fell by 9% after the firm announced a proposal to sell up to $500m in stock, says Reuters.com. Commodities trader Glencore’s float got away on the London market in May, raising $10bn but the shares are languishing below the issue price of 530p.
With the success of Groupon, will the IPO market now pick up? It’s unlikely, says Lynn Cowan on The Wall Street Journal Online: “investors remain selective about which new stocks they are willing to bet on”.
Fertiliser maker Rentech Nitrogen’s shares disappointed last week on their first day of trading in America, despite mid-range pricing. While there are nine IPOs due to debut on the US market, says The Wall Street Journal, “all are seeking to raise less than $200m [and] none has the buzz that Groupon generated”. Of the nine, only two are exciting investors – data security group Imperva and Angie’s List, a local business website. Neither are profitable, but Imperva boasts blue-chip clients and Angie’s List is a “recognisable consumer internet brand”. However, interest could be sparked if online gaming developer Zynga launches an IPO before the end of the year. This would be seen by investors as a “prime deal”.