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Fresh Market Shares Rally as U.S. Initial Public Offerings Extend Rebound

Fresh Market Inc., the Greensboro, North Carolina-based grocery chain, posted this year’s second- biggest first-day gain for an initial public offering by a U.S. company as the IPO market extended its rebound.

Fresh Market surged 46 percent to $32.11 in Nasdaq Stock Market trading yesterday after selling 13.2 million shares for $22 each, $2 above the forecast price range, data compiled by Bloomberg and a Securities and Exchange Commission filing show.

The offering was the largest of six U.S. initial sales this week and the latest sign the market has recovered after 55 companies withdrew or postponed IPOs this year. Twenty-one companies completed deals in October, the most in almost three years, while the Standard & Poor’s 500 Index climbed to a two- year high yesterday on optimism the economy has stabilized after the longest recession since the Great Depression.

“The sun’s coming out for IPOs as investors have tended to take the possibility of a double-dip off the table,” said Jack Ablin, chief investment officer at Chicago-based Harris Private Bank, which oversees about $55 billion. “Anyone who buys an IPO has to have some hope and optimism, and we’re starting to see investor attitudes reflect that.”

Vera Bradley Inc., the Fort Wayne, Indiana-based maker of women’s handbags, posted the biggest first-day gain for a U.S. company that completed an IPO this year, climbing 55 percent on Oct. 21. ChinaCache International Holdings Ltd., the Beijing- based provider of Internet content to businesses, had the largest first-day rally on New York exchanges this year, surging 95 percent on Oct. 1, data compiled by Bloomberg show.

Relative Value

At the middle of the IPO’s forecast price range, Fresh Market would have been valued at 16.4 times net assets, according to IPOdesktop.com in Marina del Rey, California.

That’s almost six times higher than the ratio of 2.9 for Austin, Texas-based Whole Foods Market Inc., which Fresh Market identified as a competitor in its regulatory filing. Both grocery chains were valued at 25 times estimated earnings, according to IPOdesktop.com.

Fresh Market’s profit increased 45 percent to $41.1 million in the first nine months of the year, from $28.4 million in the year-earlier period, according to its SEC filing.

Whole Foods, the largest U.S. natural-goods grocer, surged the most in 15 months on Nov. 4 after its fiscal fourth-quarter earnings doubled and the company raised its profit forecast.

Exclamation Point

“There’s good demand in this particular area,” said Scott Billeadeau, who helps oversee $18 billion at Fifth Third Asset Management in Minneapolis. The earnings from Whole Foods “put an exclamation point on that,” he said.

U.S. payrolls climbed by 151,000 last month, a government report showed yesterday, exceeding the median estimate of economists surveyed by Bloomberg News. The data and the Federal Reserve’s pledge on Nov. 3 to buy as much as $600 billion of Treasuries in a second round of quantitative easing helped push the S&P 500 to its best week in two months.

Fresh Market was the first American company to complete an IPO this week after four offerings from companies based in China, Israel and Greece. Non-U.S. companies account for five of the ten best-performing IPOs on New York exchanges this year, data compiled by Bloomberg show.

Eight companies are seeking to raise a combined $855 million next week, data compiled by Bloomberg show. That would be the most sales since the week ended April 23. Five are planning to offer shares Nov. 9, the busiest day since April 21.

Next Week’s Offerings

Richmond Honan Medical Properties Inc., an Atlanta-based developer of medical-office buildings that plans to become a real estate investment trust, is seeking $293 million offering 19.5 million shares at $13 to $15 each on Nov. 9 in the week’s biggest deal. Robert W. Baird & Co. in Milwaukee, Raymond James Financial Inc. of St. Petersburg, Florida, and Toronto-based Royal Bank of Canada are arranging the IPO, a filing showed.

Complete Genomics Inc. a Mountain View, California-based biomedical company, is seeking $84 million the same day.

Wave2Wave Communications Inc., which sells wireless networks that let people make telephone calls over the Internet, will offer 4.44 million shares at $8 to $10. The Hackensack, New Jersey-based company postponed a $91 million IPO in May.

Noah Holdings Ltd., the Shanghai-based provider of wealth- management products in China, plans to sells 8.4 million American depositary receipts at $9 to $11 apiece on Nov. 9. The IPO will be led by JPMorgan Chase & Co. in New York and Bank of America Corp. of Charlotte, North Carolina.

Chinese IPOs

RDA Microelectronics Inc., also based in Shanghai, will offer 7.5 million ADRs at $8.50 to $10.50 each the same day. The semiconductor maker backed by Warburg Pincus LLC hired Morgan Stanley and Credit Suisse Group AG of Zurich to manage the sale. The IPO will cut the stake of New York-based Warburg Pincus to 56 percent from 68 percent, the SEC filing showed.

Chinese companies have accounted for 13 percent of the $19.2 billion raised by IPOs in the U.S. this year, according to data compiled by Bloomberg that exclude closed-end funds and investment companies.

The two best-performing IPOs this year are from mainland companies. JinkoSolar Holding Co., the maker of silicon wafers in China’s Jiangxi province, has gained 227 percent since its May listing. HiSoft Technology International Ltd., the Dalian, China-based company that helps businesses outsource software development, has risen 180 percent.

China’s economy will expand 9.6 percent next year, according to the Washington-based International Monetary Fund. U.S. growth will slow to 2.3 percent, the estimates show.

Asia’s IPO Share

Demand for offerings from Chinese companies has helped push the amount raised through Asian IPOs to more than $140 billion this year, the most on record, data compiled by Bloomberg show. The U.S. share of global initial sales dwindled to a record low of 11 percent last month, the data show.

“Investors are going crazy about those Chinese ADR IPOs in the U.S.,” said Ivo Kovachev, a senior emerging-markets money manager in London at JO Hambro Capital Management Ltd., which oversees about $6.3 billion. “Every week or so you see some deal jumping up by a huge percentage on the first day.”

Ikaria Inc., the Clinton, New Jersey-based developer of respiratory treatments, will sell 10 million shares at $15 to $17 apiece on Nov. 10. Goldman Sachs Group Inc. and Morgan Stanley of New York are managing the sale.

Inphi Corp., a Santa Clara, California-based semiconductor company, will sell 6.8 million shares at $10 to $12 each the same day. Morgan Stanley, Frankfurt-based Deutsche Bank AG and Jefferies Group are arranging the IPO.

Lizhan Environmental Corp., a manufacturer of synthetic leather from recycled leather waste, may also sell stock next week. The Tongxiang, China-based company is planning to offer 1.82 million shares at $5 to $6 each, an SEC filing showed.

To contact the reporters on this story: Cecile Vannucci in New York at cvannucci1@bloomberg.net; Lee Spears in New York at lspears3@bloomberg.net.

To contact the editor responsible for this story: Daniel Hauck at dhauck1@bloomberg.net.

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