MaxLinear Beats IPO Forecast as Calix Helps U.S. Deals Recover

MaxLinear Inc., a designer of semiconductors, boosted its initial public offering 28 percent as two U.S. companies raised more money in IPOs than originally sought and one sold shares at the high end of its price range.

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The maker of chips that let people watch television on their mobile devices raised $90.2 million yesterday selling 6.44 million shares at $14 each, Bloomberg data show. Carlsbad, California-based MaxLinear had offered 5.43 million shares at $11 to $13. First Interstate BancSystem Inc. sold $145 million of shares in the first IPO by a U.S. bank since the credit crisis began in 2007, 4.2 percent more than its original terms. Calix Inc., which sells connection equipment to telephone companies, priced its IPO at $13, the high end of its range.

The three IPOs come after the Standard & Poor’s 500 Index rose to an 18-month high and Financial Engines Inc., the investment adviser co-founded by Nobel laureate William Sharpe, last week became the first U.S. company this year to sell shares above the price range set by underwriters. The prior 14 transactions were cut by 25 percent on average, according to data compiled by Bloomberg.

“That we’re able to even attempt to pull off three companies in a day certainly is a strong signal that the IPO market is regaining its footing,” said Lawrence Creatura, Rochester, New York-based manager at Federated Investors Inc., which oversees $390 billion. For companies to sell shares without discounting “would be considered a victory,” he said.

The three offerings made it the busiest day for IPOs since York, Pennsylvania-based Graham Packaging Co., QuinStreet Inc. of Foster City, California, and Generac Holdings Inc. in Waukesha, Wisconsin, sold shares on Feb. 10.

One IPO

Only one company went public in the four weeks after that. In the past two weeks, three of the four IPOs have priced within or above their forecast range as the S&P 500 extended its rebound from its 2010 low on Feb. 8 to 11 percent. Last week, Palo Alto, California-based Financial Engines had the biggest first-day gain for a U.S. IPO in almost six months after pricing its $127 million offering above the forecast range.

The IPOs yesterday showed buyers are willing to pay premiums for shares after the S&P 500 reached the highest level since September 2008.

“It’s a good signal,” said Brian Barish, president of Denver-based Cambiar Investors, which oversees $5.5 billion. “There’s a big difference between needing to raise capital because you’re in a tight spot and going public because it’s a good opportunity and you can do so at a good price.”

Largest Increase

The 28 percent boost in MaxLinear’s deal size from the maximum amount it had sought is the largest increase for a U.S. IPO this year, according to data compiled by Bloomberg.

MaxLinear, which originally planned to raise as much as $70.7 million, posted a profit in 2009 for the first time in at least five years as sales increased 64 percent, its filing with the Securities and Exchange Commission showed. At its original midpoint price of $12, the offering would have given MaxLinear a market value of $353 million.

That’s 46 times earnings of $7.67 million over a full year, based on income in the most recent quarter, according to its filing and data compiled by Bloomberg.

The three biggest publicly listed companies that MaxLinear cites as its main competitors in its SEC filing, Broadcom Corp. of Irvine, California, Analog Devices Inc. in Norwood, Massachusetts, and Sunnyvale, California-based Maxim Integrated Products Inc., trade at 15.2 times to 21.6 times estimated earnings, according to data compiled by Bloomberg.

Morgan Stanley of New York and Frankfurt-based Deutsche Bank AG led MaxLinear’s sale.

Bank Deal

First Interstate of Billings, Montana, sold 10 million shares at $14.50, after offering 8.7 million shares at $14 to $16, its filing showed.

The IPO is the first for a U.S. bank since Houston-based Encore Bancshares Inc.’s initial sale in July 2007, less than a month before the start of the credit crisis that led to almost $1.8 trillion in losses and writedowns at the world’s biggest financial firms, according to Bloomberg data.

“A year ago, it would have been laughable for a bank to try and raise money in the public market,” said Federated’s Creatura. First Interstate’s IPO “indicates that there is a new dawn in the banking industry.”

The bank estimated the value of shareholders’ equity, excluding assets that can’t be sold in liquidation, would have amounted to $11.23 per share, based on an IPO at midpoint price of $15, its filing showed. That meant the lender asked buyers to pay $1.34 for each dollar of tangible net assets, 30 percent more than the median ratio of 1.03 times for 312 U.S. commercial banks, according to data compiled by Bloomberg.

Calix Premium

The lender with 72 branches in Montana, Wyoming and South Dakota will use the net proceeds to repay debt and may use the rest to help fund potential acquisitions. First Interstate hired Barclays Plc of London as its lead manager.

Calix raised $82.3 million selling 6.33 million shares at $13 each. That’s 36 percent more than the “fair value” of $9.54 a share used by the company’s board of directors when it granted stock options on Feb. 16. Petaluma, California-based Calix became profitable last quarter, posting net income to common stockholders of $2.14 million as revenue rose 25 percent.

Calix lost money since it was founded in August 1999. Its products help determine the amount and speed of voice, data and Internet services that customers are able to use.

New York-based Goldman Sachs Group Inc. and Morgan Stanley arranged the initial offering for Calix.

“Investors no longer think the sky is falling,” said Len Blum, managing partner at Westwood Capital, a New York-based investment-banking firm. “When we have stable or bullish markets, that’s when IPOs get done.”

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