Numerous IPOs saw below range pricing in 2014 and lock up pressures

Last year was a strong one for venture-backed IPOs in the United States, but not without a few darker clouds.

A significant number of health care IPOs priced below their range, and lock-up expirations put noticeable pressure on many technology shares.

So says a study of last year’s IPOs from Fenwick & West. The law firm looked at technology and life sciences deals in a year generally seen as the best since the peak of the dot-com bubble.

The study found that during the first half of the year, 44 percent of life sciences deals were priced below the range projected in their S-1s. That rose to 52 percent in the second half.

Obviously, this is not all bad news. A discriminating public market makes for longevity. Well over half of life sciences offerings then closed up on their first day of trading (61 percent in the first half and 55 percent in the second half). But it does undermine company expectations

Technology companies fared substantially better. Only 15 percent of deals priced below their range in the first half and 55 percent fell within. That rose to 27 percent in the second half, more than a quarter of companies.

First day interest was strong for technology offerings. Ninety-one percent closed above their offering price in the first half and 82 percent in the second half.

However lock-up periods pressured technology shares. The average technology IPO share in the first half of the year fell 16 percent in the four-week period surrounding the end of lock up. In the second half, tech companies saw only a 3 percent decline.

Lock-up pressures on life sciences shares were significantly less.

The year witnessed 115 IPOs from venture-backed life sciences and technology companies, according to data from the National Venture Capital Association and Thomson Reuters. The Fenwick & West study looked at 140 deals.

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