Disappointing IPO Pricings (MG, OMER, BSBR, VRSK)

Initial public offerings are supposed to do well in up-markets.  This morning we have two IPOs and both seem weak compared to some of the strength we have seen elsewhere.  Mistras Group (NYSE: MG) and Omeros Corporation (NASDAQ: OMER) are not getting any solid receptions ahead of trading.  Yesterday’s IPO from Banco Santander Brasil (NYSE: BSBR) was also a disappointment.  The only exception has been the Verisk Analytics, Inc. (NASDAQ: VRSK) IPO, which closed out with a premium open of more than 20% yesterday.  Details on each deal are below.

Mistras Group (NYSE: MG) priced under its planned range.  The range was $14 to $16 for its proposed pricing, and the formal price came in at $12.50 per share for 8.7 million shares.  J.P. Morgan, Credit Suisse and BofA Merrill Lynch brought the deal.  Mistras is a provider of technology-enabled asset protection solutions, and 6 million of the shares are being sold by the comjpany and the rest from holders.

Omeros Corporation (NASDAQ: OMER) has priced its initial public offering of 6.82 million shares of common stock at $10.00 per share.  This is the bottom of the $10 to $12 range in a deal brought by Deutsche Bank and Wedbush Morgan.  Omeros is a biotech play as a clinical-stage company committed to discovering, developing and commercializing products focused on inflammation and disorders of the central nervous system.

Banco Santander Brasil (NYSE: BSBR) was somewhat of a disappointment in its debut, despite it being the fourth largest bank in Brazil and despite the recent Rio 2016 Olympics hype that has boosted Brazilian shares.  This pricing was 525 million shares at an implied conversion price of $13.40.  This was at the mid-point of the range in Brazilian Reals in an offering brought by Santander Investment, Credit Suisse, BofA Merrill Lynch and UBS.   were the bookrunners on the deal.  Unfortunately, this one closed as a busted deal from teh start at $13.01 yesterday.

Verisk Analytics, Inc. (NASDAQ: VRSK) was the exception in the IPO market this week.  Verisk priced 85.25 million shares of common stock yesterday at $22.00 per share, above the $19 to $21 indicated price range.  This was the biggest of the U.S. IPOs for 2009 with some $1.9 billion raised.  This one closed at $27.22 yesterday, which is a gain of about 24% from its pricing.  This provider of analytics and financial actuarial data to insurance companies was brought by the lead underwriters of Bank of America Merrill Lynch and Morgan Stanley.

Jon C. Ogg
October 8, 2009