Public Markets Warming Up to Venture-Backed Companies? Boston-Area IPO List

3/11/10

It’s a far cry from a hot market for initial public offerings these days, but there are reasons to believe that the long-awaited “IPO Window” is slowly opening for venture-backed companies in the Boston area.

Sensata Technologies, an Attleboro, MA-based maker of sensors and switches, jumped through the IPO window yesterday, pricing its initial public shares at $18 apiece. By offering 31.6 million new shares, Sensata (NYSE: ST) raked in a fresh $568.8 million. This price was, however, on the low end of the company’s hoped-for range of $18 to $20 a share. (Sensata, whose business dates back to 1916, is a former unit of Texas Instruments that Bain Capital took over in a leveraged buyout in 2006. So this isn’t a traditional venture-backed company IPO by any means.)

Next in line appears to be Cambridge, MA-based cancer drug developer Aveo Pharmaceuticals. Aveo plans to raise about $100 million, in an IPO that’s scheduled to price today, according Renaissance Capital. And though the company fell short of its estimated price range of $14 to $16 per share for its public debut, Cambridge-based Ironwood Pharmaceuticals (NASDAQ:IRWD) managed to pull off an IPO last month for $11.25 per share that netted the firm $203 million. Fortunately for investors, Ironwood stock has traded up ever since, closing yesterday at $12.65.

The IPO drought for venture-backed startups in recent years has been a major bummer for both maturing startups and their investors. When public markets aren’t receptive to IPOs, it blocks one avenue that venture firms use to get liquid cash returns after years of locking it away in a startup. For private companies, the lack of a healthy IPO market forces some to look elsewhere for funding to keep their operations afloat. It can also make it harder to entice employees when there isn’t a realistic chance that all their sweat equity will someday turn into financial equity.

One recipe for venture-backed companies to break into the public markets appears to be having a product on or close to the market, which significantly reduces the risk for public investors. For example, A123 Systems (NASDAQ:AONE) made a successful public debut in September, which raised more than $400 million, in part because the Watertown, MA-based company was already generating revenue from sales of its advanced lithium-ion batteries. Ironwood’s IPO followed the firm’s successful completion of two pivotal trials for its lead treatment for constipation.

We’ve compiled a list of New England-based life sciences and technology companies that are in registration to go public. (While we’ve cross-referenced our list with the Renaissance Capital website, please let us know if we’ve missed any.)

Here’s the list of active Boston-area IPOs:

Aveo Pharmaceuticals, a Cambridge, MA-based developer of cancer treatments, could launch its IPO sometime this week. A big question is whether the firm’s IPO price range of … Next Page »

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