The long-dormant public offering market in Los Angeles has sprung to life in recent weeks, led by two strong IPO debuts in the technology sector.
Wireless game maker Jamdat Mobile Inc. and fingerprint identification firm Cogent Inc. each met with enthusiastic receptions in their stock market debuts, tracking a broader rebound in the technology sector.
“L.A. has had several hot IPOs and with the Nasdaq coming back, it may be a strong IPO market for L.A. and Orange County, which we haven’t had for two years now,” said Tom Taulli, co-founder of CurrentOfferings.com, an Internet research firm in Newport Beach.
Jamdat’s $102 million offering, in particular, has become one of the hottest IPOs of the year. The Los Angeles-based software company, best known for its popular Jamdat bowling game played via cell phones, saw shares jump 25 percent in just three days of trading. On Oct. 7, its shares closed at $27.45, 71 percent higher than its IPO price of $16.
Meanwhile, shares of South Pasadena-based Cogent, whose systems were used in identifying convicted killer Lee Malvo in the Washington D.C.-area sniper attacks, were up 61 percent after raising $248 million in a Sept. 24 IPO priced at $12 a share.
Outside of L.A., Santa Barbara-based CallWave Inc. and San Diego-based WebSideStory Inc. each were trading higher than their IPO prices last week.
CallWave’s software allows customers to receive calls across landline, mobile and Internet networks, while WebSideStory is a provider of Internet-based marketing data.
Non-tech issues struggle
Taulli said that while the IPO market has been weak, the fall offerings could help end the year on a positive note. There’s some question, however, about industries outside of technology.
Real estate developer Thomas Properties Group Inc., money manager Ares Capital Corp. and customer service outsourcing firm PeopleSupport Inc. each was able to pull off its IPO, but the results were mixed.
Los Angeles-based PeopleSupport, with facilities in the Philippines, had to cut the price on Sept. 30 to $7 a share from an expected range of $10 to $12. As of Oct. 7, the shares had fallen further to $6.80.
Thomas Properties, which owns a dozen major office properties that include downtown’s Arco Plaza, similarly cut the price on its IPO to $12 a share from the expected range of $13 to $15, after first reducing the number of shares being offered. At the end of its first day of trading on Oct. 7, the shares stood at $12.06 each. Thomas Properties raised $177 million.
The $165 million offering by Ares, a business development company and mezzanine fund managed by the Los Angeles-based private equity firm Ares Management, provided more fizzle than sizzle. Ares trimmed the size of its offering to 11 million shares, down from 17 million, while its stock closed at $15.15 Oct. 7.
Taulli suggested that the trend among private equity firms to raise funds in the public markets has not caught on among investors, who are feeling the undertow from the lackluster performance of New York-based Apollo Investment Corp. Apollo raised $930 million in its April IPO but shares haven’t budged much above its $13.50 opening price. Since then, several big firms such as Blackstone Group and Kohlberg Kravis Roberts & Co. have filed to sell shares to the public. But Kohlberg scrapped its plans because of waning investor interest.
One non-tech company that fared well was New Century Financial Corp., a Newport Beach-based real estate investment trust and the second-largest subprime mortgage lender in the United States. New Century raised $783 million after increasing its price range to $58 a share on its Oct. 1 IPO. As of Oct. 7, it was trading at $58.70.
Other local offerings waiting in the wings include Lynwood-based Earle Jorgensen Co., one of the largest remaining independent steel distributors; and WH Holdings Ltd. of Cayman Islands, the holding company for Herbalife International Inc.
In addition, the animation unit of DreamWorks SKG is awaiting the box office results of the movie “Shark Tale” before deciding whether to launch its planned IPO or wait until next year.
