10 BIG

IPOs
IN THE PIPELINE
By Carl Gutierrez

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T
he market for initial public offerings has come a long way from the dark days of late 2008 and early

2009, but continued economic uncertainty and tight credit conditions make for a discerning group of

investors for companies that want to come to market. That doesn't mean deals can't get done, but expect the

rest of 2010's offerings to be tilted more in favor of household names with strong track records.

"So far this year has been very cool," says Scott Sweet, senior managing partner of IPO Boutique, not-

ing 26% of priced offerings have been cancelled. "Although the volume of IPOs is well up over last year,

most have needed to be cut in price and the performance has been mixed at best." The three basic com-

ponents to a sizeable IPO, Sweet says, include an increase in year-over-year revenues, a decrease in losses

and/or increase in profits year-over-year, and low debt levels, but that mix has been difficult to find. "Though

the IPO-pipeline of those still to debut is at a rather robust 150-plus companies, many have been there for

a year or longer," Sweet says.

Included in this report are 10 initial public offerings slated to be issued in the coming months. Investors

should keep in mind however, that the IPO market produces as many losers as it does winners. In 2003

radio company Citadel Broadcasting went public at $19 per share but by the end of last year its shares had

become nearly worthless as it headed into bankruptcy reorganization.

According to Renaissance Capital, there have been 86 IPOs so far this year with an average total return

of -3%. China Hydroelect is down 59.7% since its January IPO and Mitel Networks is down 49.7% since

its April offering. The news is not all bad; JinkoSolar is up 122.4% since its May IPO and China Lodging

is up 71.9% since it went public in March.

Also, don't feel left out of the party if you don't get into a stock right when it goes public. Google, for ex-

ample, opened at $85 on August 19, 2004 and recently traded for $482.15% for a whopping cumulative

return of 467%. If you didn't get into GOOG until six months after the IPO and bought in at $197.95 you'd

be up 144%. That's a big win in anyone's book.

For details on IPOs, check the U.S. Securities and Exchange Commission's Web site.

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GENERAL MOTORS
Deal size: estimated $10-$20 billion
Lead underwriters: Morgan Stanley, JP Morgan,
Bank of America Merrill Lynch, Citi

Produces automobiles and trucks under such

brands as Buick, Cadillac, Chevrolet and GMC.
GM's IPO means many things to many people, and is
unique for the political weight its performance holds. "It's
a very interesting situation because of the background and
its size, and it will probably be a very large deal," says Nick
Einhorn, research analyst at Greenwich, Conn.-based Re-
naissance Capital, "but there is still a lot of uncertainty over
what the market reception will be."

ZIPCAR
Deal size: $75 million
Lead underwriters: Goldman Sachs, JP Morgan

Car rental service. Rents cars by the hour or day.

"In general what we've seen is the companies that have re-
ceived more interest and performed better are the ones that
have a unique growth angle, and Zipcar has that," Nick Ein-
horn says.

SKYPE
Deal size: $100 million
Lead underwriters: Goldman Sachs, JP
Morgan, Morgan Stanley

Software application that allows users to

make voice and video calls over the Internet.
Like Zipcar, Einhorn believes Skype will garner in-
terest due to its unique growth story. EBay, which
sold a majority stake in the voice-over-Internet busi-
ness to a private equity firm in 2009, still owns a
stake in the company.

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BOOZ ALLEN HAMILTON
Deal size: $300 million
Lead underwriters: Morgan Stanley, Bar-
clays Capital, Bank of America Merrill Lynch

Provides management and technology con-

sulting services.
The management consulting firm is relatively
mature for an IPO, posting $5 billion in annual
sales. "It's a name that people in the consulting
industry would recognize," Nick Einhorn says.

NIELSEN HOLDINGS
Deal size: $1.8 billion
Lead underwriters: JP Morgan, Morgan Stanley

Measures a broad range of consumer behavior, includ-

ing watching television, listening to music and other
media and retail areas.
Nielsen is another large company prepping for an IPO, as the ratings
provider has almost $5 billion in sales. It's "a recognized name," says Einhorn, "and that will also generate interest in investors
that don't necessarily focus on the IPO space."

HCA
Deal size: $4.6 billion
Lead underwriters: Bank of America
Merrill Lynch, Citi, JP Morgan

Operates acute care, psychiatric and

rehabilitation hospitals in the U.S.
and England.
The largest provider of hospitals in the U.S.
was taken private in a massive leveraged buy-
out by Bain Capital and KKR in 2006. "The
company has $30 billion in annual revenue,
and is therefore likely to be one the largest
IPOs of the year," Nick Einhorn says.

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NETSPEND
Deal size: $4.6 billion
Lead underwriters: Goldman Sachs, Bank of America Merrill Lynch

Provides reloadable prepaid debit cards.

"One of the recent successful IPOs is Green Dot, its largest competitor, and
because of that people look at NetSpend's IPO as another potential winner,"
Einhorn says of the prepaid debit card provider.

SILVER SPRING NETWORKS

Deal size: NA
Lead underwriters: Morgan Stanley, Jefferies & Co.

Smart Grid network solutions provider.

The networking provider hasn't registered plans for a pub-
lic offering with the SEC yet, "but there's talk it will in the
fourth quarter," says Scott Sweet, senior managing partner
at IPO Botique.

GAMEFLY
Deal size: $50 million
Lead underwriters: Bank of America Merrill Lynch, Piper
Jaffrey

Mail-order video game rental company.

"It's very much like NetFlix in that it mails video games and its num-
bers are very good, but they're in no rush because they don't want an
artificially low price," says Sweet.

TOYS 'R' US
Deal size: $800 million
Lead underwriters: Goldman Sachs, JP Morgan,
Bank of America Merrill Lynch

Toy and juvenile products retailer.

Another household name backed by private equity, the toy-
maker's public offering "has been pretty anticipated for a
while," says Renaissance Capital's Einhorn.

Source of all deal size and underwriter data: IPO Home

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