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 Online food delivery service GrubHub Inc <GRUB.N> saw its shares
soar as much as 57 percent in one of the biggest first-day jumps so
far this year.
Shares in Healthcare IT company IMS health <IMS.N>, software maker
Five9 Inc <FIVN.O> and energy software company Opower Inc <OPWR.N>
also jumped well above their offer prices.
King's first-day performance has offered the worst so far this year,
a rare blemish in a strengthening IPO market.
Improving economic fundamentals, record low interest rates and
strong capital markets have boosted the U.S. IPO markets, nearly
doubling IPO volumes for the first quarter and making it the busiest
IPO season since the dotcom boom of 2000.
"The King offering was so oversubscribed and failed miserably but
there is certainly a lot of appetite for new issues which goes to
show that the IPO market is not deal specific," said Jack Ablin,
chief investment officer at BMO Private Bank.
"There is a lot of liquidity around," Ablin added.
Last week, King Digital fell as much as 16 percent in their debut,
underscoring investor concern about the company's heavy reliance on
its hit game, "Candy Crush Saga", and dampening hopes that its
coming-out party could revive investor interest in the mobile gaming
industry.
For some investors, the IPO brought back memories of the Internet
boom and bust in 1998-2001, where profitability and other financial
fundamentals of companies took the back seat to a raging fad about
anything with a dotcom identity.
IPO activity during the first quarter totaled $47.2 billion, an
increase of 98 percent from last year at this time and the strongest
annual start for global IPOs since 2010.
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Some analysts though feel that the strong appetite is for smaller
deals and say larger offerings are more difficult to price.
"I think it has been a really hot IPO market for small deals and
specialty industries like GrubHub or companies which are not tied to
an economic cycle," said Josef Schuster, founder of IPOX Schuster, a
Chicago-based IPO research and investment house.
Bigger offerings such as the upcoming Ally Financial, GE Capital and
even Chinese e-commerce giant Alibaba Group Holding Ltd, will be
subject to much tighter scrutiny.
"Investors want original IPOs and fewer spin-offs or private equity
kind of deals. They are looking for a whole portfolio of small and
unique stories in their basket," Ablin said.
GrubHub shares were trading up 38 percent at $35.90, while those of
IMS Health were up 12.3 percent at $22.46 in afternoon trading on
Friday.
Shares of Five9 were up 15 percent at $8.08 and those of Opower were
up 21 percent at $23.02.
(Reporting by Tanya Agrawal in Bangalore;
editing by Saumyadeb
Chakrabarty)
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