Investors seek out Chinese, consumer IPOs
Sunday, 24 October 2010
NEW YORK, Oct 23 (AP): After a two-month rally in US stock markets, initial public offering (IPO) investors appear eager to buy into China's fast-paced growth and expanding middle class, and make selective bets on US consumers' slowly rekindled desire to shop and dine out.
This week, tutoring service TAL Education Group is up 65 per cent since its IPO, which raised $120 million. Handbag maker Vera Bradley Inc also gained 68 per cent this week after its $176 million IPO, while restaurant chain Bravo Brio Restaurant Group Inc rose 21 per cent.
And prepaid debit card provider NetSpend Holdings Inc. raised $203.5 million and has risen 23 per cent despite regulatory difficulties at its primary issuing bank.
Volatile markets and economic uncertainty tend to squelch demand forinitial public offerings. After a steep spring decline and a turbulent summer, the Dow Jones industrial average has risen more than 3 per cent so far in October after its best September since 1939.
The gain in US markets has most benefited investors who bought into Chinese companies listing in the US. Chinese companies have chalked up some of the biggest returns of the past 12 months this autumn.
But consumer companies serving Americans have also tiptoed back to the IPO market. While the US economy is growing only modestly, investors are salivating at the prospect of big returns in China, the world's No 2 economy.
So investors may be more selective with US consumer IPOs, which have not been common since the US downturn began. Buyers have not suddenly decided Americans are once again ready to spend big at the mall, analysts said.
This week, tutoring service TAL Education Group is up 65 per cent since its IPO, which raised $120 million. Handbag maker Vera Bradley Inc also gained 68 per cent this week after its $176 million IPO, while restaurant chain Bravo Brio Restaurant Group Inc rose 21 per cent.
And prepaid debit card provider NetSpend Holdings Inc. raised $203.5 million and has risen 23 per cent despite regulatory difficulties at its primary issuing bank.
Volatile markets and economic uncertainty tend to squelch demand forinitial public offerings. After a steep spring decline and a turbulent summer, the Dow Jones industrial average has risen more than 3 per cent so far in October after its best September since 1939.
The gain in US markets has most benefited investors who bought into Chinese companies listing in the US. Chinese companies have chalked up some of the biggest returns of the past 12 months this autumn.
But consumer companies serving Americans have also tiptoed back to the IPO market. While the US economy is growing only modestly, investors are salivating at the prospect of big returns in China, the world's No 2 economy.
So investors may be more selective with US consumer IPOs, which have not been common since the US downturn began. Buyers have not suddenly decided Americans are once again ready to spend big at the mall, analysts said.