So far in 2007 three Utah companies - EnergySolutions, ZARS Inc. and Amedica Corp. - have filed papers with the U.S. Securities and Exchange Commission to undertake initial public offerings (IPOs) of their stock.
The three proposed offerings in just the first six months of this year might signal that the long dry spell in IPOs that followed the 2000-2001 dot-com market collapse finally may be starting to wane in Utah, as it did nationwide almost five years ago.
From 2000 through 2002 the market for IPOs was impacted by what probably was the worst wipe out in the technology and growth sectors in a generation, said Kathy Smith, a principal at Renaissance Capital, a Greenwich, Conn., company that researches and invests in newly public companies.
"The past five years, though, have been good for IPOs,"Â Smith said, pointing to the performance of the company's IPO mutual fund in that time period. The Renaissance IPO Plus Aftermarket Fund has posted annual gains ranging from 4 percent to 52 percent since 2003 and so far this year is up 8.6 percent.
As the stock markets started to recover after the dot-com sell-off, Smith said initially it was more-visible, better-run companies that ventured into the IPO market. They were followed by commodity companies - natural resources and energy concerns - and then financial firms.
"Lately, we seem to be seeing more growth companies," and they may include those Utah companies that want to go public, she said.
Growth companies generally are considered businesses whose revenue growth exceeds the average in their fields. They typically don't pay dividends, but instead invest their profits for expansion.
Of the three Utah companies announcing their intentions to go public, two are in the medical field. ZARS is a specialty pharmaceutical company that is focused on developing topically administered drugs for pain management. Amedica is working on producing and marketing a range of spine and joint implants.
EnergySolutions is a nuclear waste company whose name now sits atop the former Delta Center, home of the Utah Jazz professional basketball franchise.
Smith noted that so far this year the number of IPOs nationally is up 28 percent, compared with the same time last year.
There also is a healthy backlog of companies, including some in Utah, that have announced their intentions to go public but whose shares haven't been "priced" or offered for sale.
"You can expect most of those companies to go public within the next three or four months," said Daren Shaw, a managing director of D.A. Davidson's investment banking group who is based in Salt Lake City.
Of course, there is a flip side to the recent increase in proposed IPO activity in Utah, Shaw said. "The state is losing more public companies than its is gaining."
In the past six months, Utah companies that include Mity Enterprises, 1-800 Contacts, Zevex and Altiris have either been acquired or have agreed to be taken over by larger companies, Shaw pointed out.
steve@sltrib.com
