NEW YORK (Reuters) – Two companies’ shares struggled in their debuts on the New York Stock Exchange on Friday, capping a week of poor performance for initial public offerings as investors grow choosier at year-end.
Chinese radiotherapy and medical imaging company Concord Medical Services Holdings Ltd (CCM.N), closed 13.6 percent below its IPO price, and used car and truck auctioneer KAR Auction Services Inc (KAR.N) closed up only 0.2 percent.
Stocks often rise 10 to 12 percent on their first day of trading.
Of the eight IPOs scheduled this week, one was withdrawn after the company was acquired, three were pulled due to bad market conditions and most of the rest traded lower on their first day.
The best performing IPO for the week — Pebblebrook Hotel Trust (PEB.N), a real estate investment trust that plans to buy hotels — rose just 2.2 percent on its first day of trading.
“There are no compelling, must-do IPOs this week,” said IPOfinancial.com President David Menlow. “I think they (investors) just don’t see anything there that makes a table-pounding argument to buy the stocks.”
Investors’ reluctance to take risk is more a matter of the time of the year than a broader fear of initial public offerings, Menlow said.
The China-based company, which raised about $132 million in its IPO, sold its shares for $11. It had originally planned to sell shares for between $9.50 and $11.50 apiece.
Concord Medical operates a network of radiotherapy and diagnostic imaging centers in China. As of Sept. 30, the company operated 83 centers in 36 cities there. The company, which sold 12 million American Depositary Shares, said it would use the proceeds to expand and develop research centers, and for general corporate purposes.
Underwriters were led by Morgan Stanley, JPMorgan and China International Capital Corp Hong Kong Securities Ltd.
Concord Medical posted net revenues of 205.7 million yuan ($30.1 million) for the nine months ended Sept. 30, up 101.6 percent from a year before. It posted net income of 89 million yuan, up 122.3 percent from a year earlier.
On Thursday, another China-based medical company struggled in its Nasdaq debut. China Nuokang Bio Pharmaceutical Inc closed down 3.7 percent at $8.67, after pricing for $9 late on Wednesday, below its expected pricing range.
A STRUGGLING INDUSTRY
Shares in vehicle auctioneer KAR Auction Services Inc also fell initially in their New York Stock Exchange debut on Friday, though they recovered to close slightly above the IPO price.
The shares were down as much as 7.4 percent earlier in the day. The Indiana-based company sold 25 million shares for $12 each and raised about $300 million on Thursday. It had originally planned to sell 23 million shares and had expected them to price for between $15 and $17 each.
KAR auctions used and salvaged vehicles. In 2008, the company sold more than 3 million cars and trucks.
CSM Worldwide analyst George Augustaitis said that fleet auctions of company and government vehicles will continue, but auctions of consumer-purchased vehicles, which are typically auctioned after 4- or 5-year leases, could dip in a few years if consumers continued to acquire fewer vehicles.
The auto industry worldwide has been hit hard as consumers scale back spending, and companies have accepted government funds to stabilize sales and prevent collapse.
“The business can dry up really quickly,” said Augustaitis.
KAR Auction Services posted revenues of $1.3 billion for the first nine months of 2009, down 4.6 percent from a year before. The company posted net income of $17.9 million, versus a $166.9 million loss a year earlier. It said in a regulatory filing that it plans to use proceeds from the IPO to repay debt and loans.
Underwriters were led by Goldman Sachs & Co, Credit Suisse, Bank of America, and JPMorgan. The underwriters have the option to purchase an additional 1.8 million shares.
(Reporting by Clare Baldwin, editing by Gerald E. McCormick, Leslie Gevirtz)