Thursday July 2, 09:29 PM
IPO VIEW-Last U.S. IPO in Q2 helps sustain momentum
By Phil Wahba
NEW YORK, July 2 (Reuters) - This week's initial public offering by software maker LogMeIn Inc, the last of the second quarter, added to a near-perfect streak of successful IPOs in the United States in 2009, raising hopes
for a sustained recovery in IPO activity later this year.
LogMeIn became the 10th IPO in the United States out of 11 deals this year to jump in its trading debut, according to Thomson Reuters (TRI.TO - news) . LogMeIn rose 25 percent on Wednesday, the day after pricing the IPO at the top of its estimate range. (The tally excludes IPOs by REITs and blank check companies.)
The largest first-day jumps of the quarter included a 39.6 percent rise by language training software maker Rosetta Stone Inc in April and a 59.5 percent leap by online restaurant reservations service OpenTable Inc in May.
'The issues have been well received by the marketplace and if they continue to perform well in the aftermarket, we can expect to see the IPO market open further,' said Tim Monfort, the head of equity capital markets at Jefferies & Co.
And by and large they have, but investors may have to wait before seeing how enduring this IPO recovery is - no deals are currently scheduled for pricing.
All IPOs in the class of 2009 but one -- Chinese chemicals maker Chemspec International Ltd -- were still trading above their IPO price as of midday Thursday.
What's more, the FTSE Renaissance IPO Composite Index, a float-weighted index of IPO performance, has returned 21.1 performance this year through July 1, besting the S&P 500 which has risen 2.2 percent over the same period.
A key ingredient to the success of these IPOs has been their conservative pricing, which has helped generate returns that reward investors and whet their appetite for more, Monfort said.
The warm reception given to most of the IPOs will shake the pipeline and spur those waiting in the wings, an analyst said.
'With the first six months a success in the IPO market, it should induce more filings and more venture capital related deals,' said Scott Sweet, senior managing director with advisory firm IPO Boutique.
Already, venture-backed IPOs have begun to stage a comeback, with six deals in the second quarter alone, after a dismal 2008.
The notable venture-backed IPOs in the second quarter included the LogMeIn and OpenTable deals. Private equity-backed IPOs also showed signs of life with the Rosetta Stone deal, the first to go in nearly nine months.
LogMeIn was the seventh technology IPO of 2009, a trend analysts and bankers expect will continue through the year.
'Tech IPO's had the best overall six-month performance in 2009 and the most deals - that will likely be a repeat in the third quarter and beyond,' Sweet said.
(Reporting by Phil Wahba; Editing by Tim Dobbyn) Keywords: MARKETS STOCKS/IPOS
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