IPO Pace Heats Up, But Performance Suffers –

The IPO market spiked in Q2 as 30 venture-backed companies launched IPOs. Unlike during the Internet Bubble years, when most IPOs had a dot-com in their name, IPOs lately are coming from a diverse collection of VC-backed companies that are selling everything from online games and jewelry to gym memberships and discounted trips to China.

The largest VC-backed IPO during Q2 was Life Time Fitness, which raised $183.2 million. Life Time’s investors – Norwest Equity Partners and Apax Partners Inc. – saw the company’s stock trading 25% above its IPO price as of July 31. Though Life Time’s gain is not as high as the 221% aftermarket performance of Pharmion Corp. – a developer of products to treat cancer – any positive performance is noteworthy.

In fact, although the number of IPOs has spiked in 2004, with more than 110 going public this year to date, the aftermarket performance has been flat, according to Renaissance Capital, an IPO research firm, which reports that about half are trading at or above their offering prices. The same holds true for VC-backed IPOs. Of the 77 VC-backed companies that went public from August 2003 through the of July, 39 were trading at or above their IPO as of July 31.