IPO Recap: S&P Ends Week Up, IPOs End Higher

Despite a light week for new issue stocks, the IPO market received plenty of attention due to this year's third-largest IPO, JD.com JD.

JD.com sold 93.7 million shares, raising $1.8 billion after pricing at $19 per American Depository Share (ADS), above the expected range of $16 to $18. The stock opened higher on May 22 at $21.75 and moved to an intraday high of $22.80 before embarking on a slide near $20.

The company intends to use the $1 to $1.2 billion of the proceeds for building out its current fulfillment infrastructure including land, warehouses, vehicles and shipping and delivery.

Other issues for the week ended May 23 are Superior Drilling Products SDPI, Parsley Energy PE, Agile Therapeutics AGRX and SunEdison Seminconductor SEMI.

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Superior Drilling Products sold 6.8 million shares for $4 per share, below the expected range of $5 to $7. Raising $27 million through ROTH Capital Partners, Superior Drilling opened Friday, May 23, for $4. In an early and volatile session, the stock put in a floor of $4 and by the afternoon moved towards its $4.35 high to settle in at $4.44, a gain of 11 percent for IPO investors.

Proceeds of the offering will be primarily used to cover part of the Hard Rock purchase and to repay various debts. Hard Rock Solutions is being acquired to serve as the tool marketing and distribution division.

Parsley Energy engages its business in acquisition, development, production and exploration of crude oil and natural gas locations, primarily in West Texas. The company sold 50 million shares at $18.50 to raise $925 million.

After opening at $22.30 for trading on Friday, the stock quickly sold off five percent before regaining traction and closing at $22.20. After the first day of trading, IPO investors were up 20 percent. Parsley Energy employed underwriters Credit Suisse, Goldman Sachs, J.P. Morgan and Wells Fargo.

Parsley intends to use $737 million of the proceeds preferred interests and to repay the entirety of its revolver to holders of Parsley Energy, LLC. It will also fund the acquisition of land in the Midland-Basin Core for exploration and development.

Agile Therapeutics focuses on women's health. It is a pharmaceutical company that develops contraceptives using proprietary transdermal technology. Agile raised $55 million by selling 9.2 million shares for $6 each. Shares opened low at $5.50 on Friday and tried to push higher, but the trend couldn't sustain as shares closed at $5.50. RBC Capital and William Blair are the underwriters responsible for the offering.

Twirla, Agile's flagship product, will consume the majority of proceeds as it undergoes phase 3 trials. Any leftover proceeds will be used for Corium validation and development of future products. The company also suggests it may use proceeds for scheduled payments on outstanding debts; the focus, however, is to support Twirla.

SunEdison Semiconductor develops silicon wafers using its own electronic-grade silicon and a manufacturing process that includes strict quality controls. The company sold 7.2 million shares at $13 to raise $93.6 million.

Shares opened Thursday at $15 and moved slightly higher to close the week at $15.55. IPO Investors were fortunate to experience a 20 percent gain in two days. SunEdison chose five firms to underwrite the offering: Citigroup, Deutsche Bank, Goldman Sachs, Macquarie Capital and Wells Fargo.

The company intends to use the proceeds in the following manner:

• $16.8 million to fully repay intercompany notes.
• $11.1 million to repay third-party debts relating to the semiconductor materials business.
• $62.3 million will remain as a cash item on the balance sheet.

Initial public offerings offer investors incredible opportunity to take ownership in a security on the ground floor. Last week's issues rewarded early investors with a gain of 9.9 percent, compared to the S&P 500's 1.3 percent gain.

The IPO scene now takes a break -- at time of publication, there are no scheduled offerings for the week.

Disclosure: At the time of this writing, the author holds no positions in the mentioned companies.