Facebook Inc : EQT Midstream IPO Prices at High End of Range
06/26/2012| 06:15pm US/Eastern
--First IPO in more than a month
--Set to trade Wednesday on the NYSE
--Three others expected this week
The first of four IPOs expected in the U.S. this week priced Tuesday night, breaking a dry spell for new stocks that has stretched back more than a month.
Energy partnership EQT Midstream Partners L.P. sold 12.5 partnership units at $21 apiece, at the high end of its expected range. It is set to begin trading Wednesday on the New York Stock Exchange as "EQM."
The company is the first initial public offering to price since Facebook Inc. (FB) went public May 18. Also expected this week are offerings from software firm Exa Corp., cloud-based computer-service provider ServiceNow Inc., and biopharmaceutical firm Tesaro Inc.
Historically after a freeze in the IPO market, the first IPOs--so-called "icebreaker" deals--show good returns, according to Renaissance Capital, in Greenwich, Conn. These first deals showed an average first-day return of 20%, compared to the historical norm of 11%.
The IPO research firm says over the long run, icebreaker deals can be very rewarding: Investors seek to extract stiff discounts after a freeze, so the IPOs have farther to rise when the broader markets turn positive. According to Renaissance's research, the icebreaker deals it researched since 2000--IPOs that came to market after a dry spell of at least 32 days--delivered an average three-month return from their IPO prices of 64%, compared to a 6% gain on the Standard & Poor's 500 stock index during the same periods.
EQT Midstream doesn't fit the typical profile of an icebreaker deal because it is a limited partnership, a structure that usually attracts investors with future dividends rather than any quick stock pops. At its IPO price, EQT Midstream's expected annual dividend payout yields 6.7%.
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