Bluestem Brands Inc., the catalog-and-online retailer that includes Fingerhut, postponed its initial public stock offering this week after its underwriters and potential investors could not agree on a share price for the company, which markets to low- and moderate-income households.
But eight other companies successfully sold shares to the public for the first time this week, including online referral firm Angie's List and specialty retailer Mattress Firm Holding Corp.
It could be months before Bluestem, based in Eden Prairie, is able to mount another effort after failing to attract sufficient buyers to a deal that was targeted at raising more than $160 million at $14 to $16 per share.
"Buyers and sellers were unable to get together at [that] price level," said John Fitzgibbon Jr., founder of IPOScoop.com, an independent rating service. "It goes back to Economics 101. There needs to be a willing buyer and a willing seller."
There was market chatter that Bluestem pulled the offering rather than discount the price to $10 to $12 a share. Twin Cities investment professionals, who declined to comment for the record on a deal they were not directly involved with, speculated Friday that prospective buyers were wary about a mass-market retailer of general merchandise to a lot of credit-impaired customers who buy on installment plans in a soft market for all but high-end retailers.
Piper Jaffray & Co. and Wells Fargo Securities were the lead underwriters on the Bluestem offering. Bluestem Brands officials and its investment bankers declined to comment on Friday.
"It's not the end of the world," Fitzgibbon said. "They could postpone it and bring it back at another time."
Bluestem had planned to use the proceeds to pay down debt.
Bluestem does business in the "subprime" credit-customer market and charges prices and interest rates that compensate for the higher credit risk. Last year, Bluestem charged off 16.5 percent of its customers' debt, down from 22 percent two years earlier, according to its IPO offering statement.
Bluestem offsets risk by imposing low credit lines (39 percent were under $500 last year) and a high, fixed interest rate of 24.9 percent on Fingerhut purchases.
Despite recent market volatility, the IPO market has recovered in recent weeks. Online coupon company Groupon successfully raised $700 million on Nov. 4 pricing its shares at $20. On Friday, Groupon closed at $26.19.
After a turbulent summer in the stock market, there were no IPOs in September and just two deals priced in October. So far in November, 15 companies have successfully launched, making November one of the busiest months since this past December.
However, only two of the eight companies going public this week were able to price their stock at the top end of their offering ranges -- Angie's List and Mattress Firm.
Fingerhut, founded in 1948, has offered monthly payment plans to customers for more than 60 years. Bluestem Brands was established in 2002 when the company acquired certain assets of Fingerhut from Federated Department Stores. The department store company had acquired then-larger Fingerhut in 1999.
Bluestem established the Gettington.com brand in 2009 to target a younger, more e-commerce-focused customer.
For the year ended Jan. 31, the company had sales of $521.3 million, which would have made it the 44th-largest company in our Star Tribune 100 rankings of Minnesota's largest public companies. Through the first six months of 2011, the company has sales of $232 million, a 20 percent increase over the same period a year ago.
Bluestem would have become only the second Minnesota-based company to complete an IPO offering in 2011. In February, Kips Bay Medical Inc. raised $16.5 million by selling about 2.1 million shares at $8. Kips Bay is a medical device company looking to commercialize a device used in coronary artery bypass grafting surgery.
Meanwhile, two other Minnesota companies have registered to go public. Maple Plain-based Proto Labs Inc., a quick-turn manufacturer of custom parts, filed in June to raise more than $100 million, but it hasn't yet pitched itself to prospective investors.
On Monday, BioAmber Inc., a Plymouth-based next-generation agricultural start-up, filed an initial registration statement hoping to raise $150 million.
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