OK Year For IPOs

April 24, 2006
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GRAND RAPIDS — Fewer companies went public last year than in the previous year, but the number that did file an initial public offering in 2005 is greater than in any year from 2001-2003.

Nationwide in 2005, 194 companies filed IPOs worth $34 billion in proceeds. In 2004, 216 went public, with proceeds totaling $43 billion.

But the average size of a deal in 2005, $175 million, was the smallest in seven years.

In Michigan, five went public last year — the most since 1999 — and all five are located in southeast Michigan. Three companies in the state went public in 2004, while none did the previous three years.

Firms in the health care and biotech field continued to lead the IPO parade nationally last year, accounting for 18 percent of the 194 IPOs that were filed. In 2004, these companies represented 23 percent of the 216 filings. And through early April of this year, the health care and biotech field had more firms go public than any other industry.

Coming in second and third last year were financial institutions and technology firms, respectively, with 18 percent and 15 percent of all IPOs. In 2004, tech was second and finance third, and this year both were among the IPO leaders.

But the biggest IPO gainer so far this year is the energy field. Through the first quarter of 2005, energy accounted for 16 percent of all public offerings, which placed the industry in a tie for second with technology companies among the 11 industries. Energy finished in a tie for fifth last year and was an also-ran in the IPO derby the three previous years.

Energy’s current IPO share is the highest the field has held since 1999.

According to Renaissance Capital, five Michigan companies went public last year, and three of the five have seen a return on their IPO. The five are:

  • ITC Holdings (ITC), an electricity transmission company in Novi. First day close: $26.40. IPO return: 14.1 percent.
  • North Pointe Holdings (NPTE), a property and casualty insurer for small and mid-sized businesses in Southfield. First day close: $12.03. IPO return: 4.2 percent.
  • Tarpon Industries (TPO), manufactures and sells structural and mechanical steel tubing and storage rack systems in Marysville. First day close: $5.25 IPO return: -42.8 percent.
  • Veri-Tek International (VCC), manufacturer of assembly and testing equipment for auto and heavy equipment industry in Wixom. First day close: $6.90. IPO return: -30.8 percent.
  • Universal Truckload (UACL), provides flatbed and dry van trucking services in the U.S. and Canada from Warren offices. First day close: $22.50. IPO return: 25.3 percent.

Total proceeds from the five came to $470 million, with ITC generating $288 million of that amount.     

Number of IPOs 1999-2006

Year

                        

Nationwide

                        

Michigan

2006

43*

2005

194

2004

216

2003

68

2002

70

2001

83

2000

406

1999

486

Total

1,566

13

*Through April 3.

IPO Review 1999-2005

1999 2000 2001 2002 2003 2004 2005
Number of deals 486 406 83 70 68 216 194
Total proceeds (billions) $93 $97 $41 $24 $15 $43 $34
Average deal size (millions) $191 $240 $491 $338 $224 $198 $175
Total return 276% -18% 16% 3% 28% 34% 18%
After-market return 111% -38% 2% -5% 14% 21% 6%
Source: Renaissance Capital’s IPOhome.com, April 2006

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