Led by the 41% first-day return of real estate listings
company Trulia (
TRLA
),
five US IPOs priced
and traded up this week. Following a 35-day lull (late August is
seasonally slow for IPOs), all five priced on Wednesday the 19th,
making it the busiest day for US IPOs since April 22, 2010. The
week's proceeds, at $1.1 billion, exceeded $1 billion for the
first time since May, and the five $100+ million deals were tied
for the most in a week in 2012. While three of the five ended the
week up 2% or less, the four new deals added to the
IPO calendar
and the steady stream of new filings suggest that activity should
continue to pick up into October.
Growth and yield continue to draw in IPO investors
The two top performers from the week, Trulia (+35%) and motor
fuels distributor Susser Petroleum Partners LP (+13%; SUSP),
benefitted from strong investor appetite for growth and yield.
Trulia, which has seen sales double in each of the past two
years, priced the day after a strong report on the housing
market, which pushed close peer Zillow's stock to an all-time
high. Investors likely bought into Susser for both its high yield
in a low-interest rate environment and the strong performance of
other recent LP IPOs Hi-Crush Partners (+30%; HCLP) and Northern
Tier Energy (+42%; NTI).
Three financial IPOs price down but trade up
The week's three remaining IPOs, all financial companies, priced
below the range and traded up slightly. Two acquisitive banks,
National Bank Holdings (+2%; NBHC) and Capital Bank Financial
(+1%; CBF), were positioned for growth but had credit concerns.
Spirit Realty Capital (+1%; SRC), with its focus on
non-investment grade tenants, also had credit concerns and
presented little differentiation from a wide selection of REITs.
Biotechs and alternative energy IPOs continue to struggle
Two other deals scheduled for this week, GlobeImmune (
GBIM
) and Smith Electric Vehicles (
SMTH
), were not completed. GlobeImmune, a biotech developing drugs
for pancreatic cancer and hepatitis B and C, was delayed.
Although biotech indexes have performed well in 2012, 38% of
biotech IPOs
have failed to get done this year. Smith Electric Vehicles, which
makes electric medium-duty trucks, withdrew its IPO and will seek
private financing. Smith sells its trucks at a loss and faces
significant supplier issues as it tries to cut costs. Like
biotechs, alternative energy IPOs have struggled, with more than
half withdrawing this year.
More than $1 billion in proceeds added to the calendar
Four companies were added to the IPO calendar this week,
representing a total of more than $1 billion in estimated
proceeds. Berry Plastics Group (
BERY
) is seeking $500 million and is backed by private-equity firm
Apollo. Apollo also backs Domus Holdings (RLGY), the world's
largest franchisor of residential real estate brokerages, which
filed for a $1 billion IPO in June. Luxfer Holdings (LXFR), a
global materials firm specializing in aluminum, magnesium and
zirconium, is looking to raise $104 million after postponing a
$151 million IPO in December 2011.
US IPO setting terms this week (9/17 - 9/21)
| Company (Ticker) |
Business |
Deal Size ($mm) |
Pricing Date |
| Berry Plastics Group (
BERY
) |
Plastic goods |
$500 |
Week of 10/1 |
| Summit Midstream Partners (SMLP) |
Natural gas transport |
$250 |
Week of 9/24 |
| LifeLock (LOCK) |
Online ID protection |
$165 |
Week of 10/1 |
| Luxfer Holdings (LXFR) |
Global materials |
$104 |
Week of 10/1 |
Three companies added to the pipeline
Two financial companies and one oil and gas subsidiary
submitted new filings. Seadrill Partners (SDLP), a subsidiary of
Norwegian oil and gas equipment company Seadrill (
SDRL
), Silvercrest Asset Management Group (SAMG), a financial
advisory firm with over $11 billion in AUM, and Gladstone Land
Corporation (LAND), an agricultural REIT, filed to raise $225
million, $60 million and $58 million, respectively. Seadrill
Partners had previously filed confidentially. There are now 146
companies in the US IPO pipeline seeking a total of $45.9 billion
in proceeds. Of these, 66 have released updates within the past
90 days.
IPO market performance update
US IPOs from the past 90 days have produced an average total
return of 29% and an average aftermarket return of 15%, down
slightly from 34% and 18%, respectively, as of last week. Of
these 27 deals, 23 (85%) are trading above their offer prices,
with the top performers coming from the consumer and technology
sectors. Year to date, the
average total return for US IPOs
has been 23% and the average aftermarket return has been 7%. The
96 deals equal the number at this point last year, while the
total proceeds of $31.8 billion are up 9%.