As financial storm recedes, IPOs return

  • Article by: PATRICK KENNEDY , Star Tribune
  • Updated: November 14, 2011 - 9:34 AM

Bluestem Brands could become Minnesota's next public company in coming days.

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Shaky global markets in the second half of 2011 tightened the clamps on initial public offerings.

In September, no U.S. company completed an IPO as the debt ceiling showdown in Washington, the debt crisis in Europe and persistent fears of another recession spooked equity markets.

But in recent weeks the markets have calmed somewhat, and talks of a U.S. recession have receded. Groupon's successful IPO on Nov. 4 signaled that investors still have an appetite for new offerings. There were three IPOs in October and five so far in November.

Eden Prairie-based Bluestem Brands could become Minnesota's next public company as early as this week. The multichannel, multibrand retailer and parent of Fingerhut amended its registration statement with the Securities and Exchange Commission on Oct. 31 and is expected to price this week, hoping to get between $14 and $16 per share.

Also scheduled to price in the coming days are IPO offerings from Indianapolis-based Angie's List and Houston-based Mattress Firm Holdings Corp.

As many as 14 initial public offerings could price in the next two weeks. Proto Labs, the Maple Plain-based quick-turn manufacturer of custom parts, also plans to go public but hasn't set an offering date or price range yet.

So far this year, only one Minnesota company has completed an IPO -- Kips Bay Medical, which developed a device used in coronary bypass surgery.

Manny Villafaña, the founder, chairman and CEO of Kips Bay Medical, is also a veteran of the IPO market, having guided seven companies through the process, including St. Jude Medical, GV Medical Inc. and CABG Medical.

In an interview last week, Villafaña said the process has gotten longer and more difficult.

Kips Bay, for example, made its first filing in April 2010. Ten months later and after 10 amended filings, the offering was completed on Feb. 11, 2011, with the company selling 2.1 million shares at $8 per share.

"I've had IPOs that have had only one or two [SEC] reviews," Villafaña said, and some of those offerings were completed in three to six months. Bluestem, which filed its original registration statement with the SEC on April 4, has already filed five amended statements with the SEC.

But in the end when the deal is complete, a party is in order.

"It's definitely a celebratory thing," said Villafaña. "We might take the team out for a nice dinner at Manny's." (The Minneapolis steakhouse is named for Villafaña.)

Investors in IPOs tend to celebrate a little later -- if at all. The most recent IPOs from Minnesota-based companies have had a mixed record. Here's a rundown.

Kips Bay Medical Inc. (KIPS), Plymouth. Completed IPO Feb. 11, 2011. Sold 2.1 million shares at $8 per share and raised $16.5 million. Kips Bay is commercializing a mesh sleeve that fits over a saphenous vein graft during coronary artery bypass grafting surgery. Kips Bay reported $158,000 in revenue for the first nine months of 2011, a 47 percent increase over same period last year. Priced at $8 per share, it closed Friday at $1.61.

Electromed Inc. (ELMD), New Prague. Completed IPO Aug. 12, 2010. Sold 1.7 million shares at $4 per share (including overallotment) and raised $7.6 million. It closed Friday at $3.75 per share.

SPS Commerce Inc. (SPSC), Minneapolis. Completed IPO April 21, 2010. Sold 4.1 million shares at $12 per share, raising $49 million. SPS, which makes supply-chain management software, closed Friday at $21.87 per share. It is the most successful Minnesota-based IPO in the past five years.

AGA Medical, Plymouth. Completed IPO Oct. 21, 2009. Sold 13,750,000 shares at $14.50, and raising $199.4 million, the state's largest offering in the past five years. AGA developed a medical device that fixes common structural heart defects and was soon acquired by St. Jude Medical for $1.3 billion, or $20.80 per share -- a healthy premium over its initial offering price.

Patrick Kennedy • 612-673-7926

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