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Capital Markets

Equity market round up: IPO – Hooray for Grand Canyon Education!

In November, Grand Canyon Education, a provider of online education services, broke the US market’s 15-week drought of IPOs with a $126 million deal, ending the US’s driest spell since 1975.

The deal, led by Merrill Lynch and Credit Suisse, priced at $12 a share at the bottom of its revised offer range, an estimated 2009 PE ratio of 22.6.

The deal succeeded despite exceptionally tough market conditions. The Dow, S&P 500 and Nasdaq fell 8.0%, 10.9% and 13.8% respectively and the broad group of comparables traded off 6.0% during the marketing period. Over the same period, the Vix volatility index increased 16.6%. On the day of pricing, the Dow, S&P500 and Nasdaq fell 5.1%, 6.1% and 6.5% respectively, marking their sixth, fourth and third worst days of 2008. Despite such daunting conditions the deal went ahead and successfully priced on the worst-performing pricing day for any IPO on record. The last time an IPO was priced with the DJIA below 8,000 was in 2003.

Equity markets round up: IPOs languish in 2008

February 2009

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