The market for initial public offerings in the US is set for a burst of activity as a several high profile deals, led by Burger King and Mastercard, come to market in the approach to the Memorial Day holiday at month’s end.

Proof of the robust pipeline for equity offerings came as last Friday became the busiest single day for IPO filings with the US Securities and Exchange Commission since March 2000, with 11 companies announcing their intention to float.

The six-year daily high point contributed to a week during which 20 IPOs were filed with the SEC – the first time since 2004 that 20 IPOs were filed in a single week.

The last time the weekly total exceeded 20 filings was during the week of April 10 2000 when the total was 24, according to Dealogic, the data provider.

David Topper, managing director and co-head of equity capital markets at JPMorgan, said: “I’m certainly bullish about the rest of the year. The ‘Class of 2006’ IPOs, if you will, has seen some very high-quality companies perform very well. So if you look at it as an asset class, it is one of the best out there.”

Dealogic defines SEC registered IPOs as those by companies, whether US or overseas, that opt for a listing in the US.

Rich Petersen, senior researcher at Thomson Financial, said: “I’d characterise the market as healthy, if not robust. You see some brand name companies such as Burger King and Vonage raising money. We are also seeing something of a transition.

“Where five years ago, technology companies were at the forefront of the IPO market, now you are seeing energy and power companies, restaurants and retailers leading the way. These are all companies with tangible products.”

The healthcare sector has been the busiest of the year to date, with 22 IPOs filed so far during 2006.

Overseas companies are also doing their bit. Last week’s filing by Telemar, the Brazilian telecommunications group, means half of the top 10 largest IPOs filed with the SEC this year come from outside the US. Telemar plans to raise $1.37bn. Burger King is expected to raise about $400m through an offering of 25m shares this week. It is one of an increasing number of companies being taken public by its private equity firm owners.

The restaurant chain is currently owned by Texas Pacific Group, Bain Capital and Goldman Sachs Capital Partners.

IPO research firm Renaissance Capital said Burger King had spent the majority of the past 17 years as a neglected subsidiary of beverage giant Diageo. The private equity firms bought the company in 2002, for $1.5bn, replacing the management team and making an intense effort to revive its fortunes.

“With its turnaround story nearing fruition, two years of positive same store sales growth under its belt and viable growth opportunities in the US and abroad, Burger King is hoping its IPO will bring the same heat as one of its famous flame-broiled hamburgers,” Renaissance said in a report.

Burger King’s flotation will be followed by offerings next week from Mastercard and Vonage. The $2.6bn Mastercard flotation is the biggest in the US since the $2.8bn IPO of Genworth Financial two years ago.

Vonage, the internet telephone services provider, is being taken public by underwriters Citigroup, Deutsche Bank and UBS.

The company, which is also backed by Bain Capital, along with 3i, New Enterprise Associates, Meritech Capital Partners and Institutional Venture Partners, recently doubled the size of its offering to $531m.

Mr Topper said market conditions were still very conducive to a healthy market and pipeline for equity offerings, with lots of money in the system. He also pointed out that the IPO market was being used in some cases as an alternative to selling entire businesses in merger and acquisiton deals.

Mr Petersen said: “This is still nothing like the 1990s [during which] you had hundreds of deals coming to market during a matter of weeks. Now you would be lucky to get a hundred deals in the first half of the year.

But he added: “You are likely to see a flurry of IPOs between now and the end of June.”
http://news.ft.com/cms/s/64c9886a-e5c7-11da-b3 ...