Two of the three U.S. companies that raised more than $900 million in their initial public offerings rose in their debuts on Thursday, while a third traded down, signaling that the appetite for new issues is still choppy.
Natural gas limited partnership Chesapeake Midstream Partners LP and wealth management technology provider Envestnet Inc. both moved higher in their initial New York Stock Exchange trading. Molycorp Inc., which has drawn attention for mining and processing rare earth oxides used in electric vehicles, wind power turbines and hard disk drives, fell.
"It's all deal by deal. Chesapeake is a good deal and there's an easy comparison out there. The other deals have too much uncertainty. Uncertainty doesn't sell in this market," said IPOdesktop.com President Francis Gaskins.
Shares of Chesapeake Midstream Partners LP, a limited partnership of Chesapeake Energy Corp. and Global Infrastructure Partners, opened 6 percent above their IPO price at $22.25 and rose to $23.06 in afternoon trading on the NYSE, up 9.8 percent.
Chesapeake Midstream treats, compresses and transports natural gas from wellheads to third-party pipelines. Its systems consist of 2,800 miles of gathering pipelines, servicing about 4,000 natural gas wells, and its two largest customers are Chesapeake Energy and Total SA, Chesapeake's upstream joint venture partner in the Barnett Shale region.
The company, which raised about $446.25 million by selling 21.25 million shares for $21 each, has said it will pay a dividend of $1.35 per unit per year.
Another recent natural gas limited partnership IPO, PAA Natural Gas Storage LP, also did well, pricing above range and trading up.
Envestnet, which sold fewer shares than planned and priced at the bottom of a cut range, hopes to benefit from growing interest in the wealth management area and is rushing to position itself to take advantage of discussions that urge investors to seek financial advisers compensated with agreed-upon fees rather than commissions.
"Affluent investors expect that their advisers are going to keep their best interest in mind as opposed to just do what's suitable," Envestnet Chief Executive Judson Bergman said in an interview with Reuters. "That macro trend is what we want to be able to finance and capitalize."
Envestnet makes most of its money from fees charged as a percentage of the assets that are managed on its platform, but also takes in some contract revenue. Fidelity Investments, Envestnet's largest client, accounts for about a third of its revenue. The company on Wednesday raised about $63 million by selling 7 million shares for $9 each.
Envestnet's shares opened 3.9 percent above their IPO price at $9.35 and rose to $10.07 in afternoon trading, an 11.9 percent rise.
Molycorp, which raised $393.75 million by selling 28.1 million shares at $14 each, was the second-largest deal of the week and the most speculative.
The company owns land in the Mojave desert of Southern California and estimates it will churn out 19,050 metric tons of rare earth oxides per year, but it will take about two years and more than half a billion dollars for the company to upgrade its equipment and ramp up production.
Molycorp's shares opened 5.4 percent below their IPO price at $13.25 and fell to $12.51 in afternoon trading, a drop of 10.6 percent.
Of the three companies that debuted Thursday, Molycorp and Envestnet priced below their expected ranges while Chesapeake Midstream priced at the top of its anticipated range.
The underwriters on the Chesapeake Midstream IPO, which is trading under the symbol "CHKM," were led by UBS Investment Bank, Citi and Morgan Stanley. Molycorp, trading under the symbol "MCP," was led by Morgan Stanley and JPMorgan. Morgan Stanley, UBS Investment Bank and Barclays Capital led the underwriters on the Envestnet IPO. Envestnet is trading under the symbol "ENV."
All three companies are listed on the New York Stock Exchange.
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