Despite the financial muscle being flexed by private-equity firms and a strong market for mergers and acquisitions, at least four Colorado companies have given word they will likely go public sometime next year.
A handful of other fast-growing Colorado firms could be candidates for initial public offerings, analysts said.
Local Matters, Ellora Energy, Biofuel Energy and National CineMedia have filed S-1 registration statements, announcing their intention to go public. With those offerings, there would be more than 110 major Colorado companies traded on the major U.S. stock exchanges.
Other firms most frequently mentioned as IPO candidates include restaurant chain Noodles & Co. of Broomfield, software-maker Webroot of Boulder and distribution company TrenStar of Greenwood Village. Lefthand Networks of Boulder, a data storage company, could be encouraged to go public by the success of Isilon Systems, a Seattle- based data company whose shares more than doubled after its debut Dec. 15.
Nationally, investment researcher Renaissance Capital expects many of the 2007 IPOs to come from international, technology and private-equity owned companies.
Here are some details about local companies intending to go public:
Its ticker would be NCMI. National CineMedia is a venture backed by exhibition companies including Regal Entertainment Group, the movie theater chain owned in part by Denver financier Philip Anschutz.
Money-rich private-equity firms swallowed a slew of public and private companies in 2006, including hospital giant HCA Inc. for $33 billion and real estate company Equity Office Properties Trust for $36 billion. Nonetheless, the IPO market remains attractive.
Going public provides companies with fresh cash to expand operations, liquidity to make acquisitions or an “exit” strategy for private investors or company insiders. It also allows management to retain control of the company, which doesn’t always happen when tapping private-equity firms or venture capitalists.
There are drawbacks. Public companies typically spend as much as several million dollars per year in regulatory costs. Wall Street’s appetite for quarterly earnings can force companies to make shortsighted decisions.
Colorado companies looking for capital to grow may skip the public markets in favor of private financing or – as an exit strategy – simply sell themselves to private or public companies, said Walter F. Imhoff, managing director for Stifel, Nicolaus & Co. in Denver.
The payoff for going public can be substantial. Five Colorado companies engineered major IPOs in 2006, one fewer than 2005. Denver-based restaurant chain Chipotle topped the class of 2006, as shares jumped 159 percent, the sixth best of any IPO. Niwot- based shoemaker Crocs had the nation’s 14th-best IPO, as shares increased by 105.7 percent.
The state’s other major IPOs were Denver-based energy company Venoco, whose shares were up 3.3 percent; Denver-based real estate investment trust DTC Industrial, down 3.7 percent; and Louisville-based drugmaker Replidyne, down 42.6 percent.
Other smaller IPOs in 2006 included Smart Move, a Greenwood Village-based moving services company that this month held a $16.6 million IPO, and Ascent Solar, a Littleton-based energy-related company that raised $16.5 million in July.
In 2006, 198 companies nationwide raised a combined $43 billion by selling shares to the public for the first time – the biggest year since 2000.
