Biofuels maker KiOR Inc made a quiet market debut on Friday, a day after the private equity-backed firm's initial public offering raised a quarter less than initially expected. Shares of the company closed at $15 on Nasdaq, the price they debuted at, after lacklustre trading throughout the day. "We weren't surprised," Morningstar analyst Bill Buhr said.
"Given the fact that for deals that aren't really exciting or have the investors enamoured like the Pandoras and LinkedIns of the world, it just might become a really, really bad market for some of the IPOs." Pasadena, Texas-based KiOR, which uses non-food biomass such as wood chips and switch grass to make crude oil, priced its offering of 10 million shares at $15 each, down from the $19-20 a piece it had planned.
The IPO market was open to different types of sectors in the last few months, but a weakening economy has driven investors away from most new issues except those of social media companies, Buhr said. Earlier this week, Vanguard Health Systems priced its IPO below its filed range, raising 18 percent less than expected, while oil and gas equipment manufacturer Stewart & Stevenson LLC postponed its market debut. The fact that KiOR expects to continue posting losses - it has never posted a profit since its December 2007 inception - also weighed on its IPO.
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