Home furnishings retailer Restoration Hardware (
RH
) gained 30% and two midstream energy LPs traded up during a
shortened week for the
US IPO market
. All three deals priced on November 1, providing an encouraging
start to what has been, on average, the most active month of the
year for IPOs. With Hurricane Sandy forcing US stock markets to
close for two days, three other previously scheduled deals were
pushed back to next week.
Improved housing market boosts Restoration
Encouraging data on the US housing market has provided a lift to
several home furnishings companies this year, including Pier 1
Imports (PIR; +48% YTD), Ethan Allen (ETH; +25%) and
Williams-Sonoma (WSM; +21%). That fact, combined with 29%
comparable store sales growth in the first half of 2012 and
aggressive expansion plans, likely contributed to Restoration
Hardware's top-of-the-range pricing and strong first-day gain,
the fifth highest for a consumer IPO in 2012. The previous
housing-focused IPO, real estate brokerage franchisor Realogy (
RLGY
), gained 27% in its market debut on October 11 and traded up
another 5% on Friday, after reporting 11% revenue growth in the
third quarter.
Midstream energy LPs continue run of success
Two midstream energy LPs, both offering high-single digit yields,
also traded up on Friday. Southcross Energy Partners (
SXE
), which owns natural gas pipeline assets, raised $180 million
and gained 12%. Delek Logistics Partners (
DKL
), which owns oil pipelines and related assets, raised $168
million and gained 6%. In the past two months, energy LPs have
accounted for more than a fifth of IPO activity, and all seven LP
deals are currently trading above their offer prices (+10% on
average). The best performer of the group, MPLX LP (
MPLX
), raised $381 million the previous week and trades 23% above its
IPO price.
IPOs from less established companies push back
pricings
Three companies, all early-stage or newly-formed, that were
expected to price last week are now on this week's
IPO calendar
. Both Radius Health (RDUS), a biotech focused on osteoporosis
treatments, and Singulex (SGLX), which provides diagnostic
testing for cardiovascular disease, are not expected to launch
their major products until 2016. Although Singulex currently
generates revenue from testing at its own facilities, it expects
losses to continue for several years as it invests heavily in its
sales force expansion and a next generation on-site system.
Taylor & Martin Group (TMG), which aims to be a leader in the
pre-owned capital asset auction and excess inventory markets, is
a roll-up of five companies and accordingly has no combined
operating history.
One company sets terms, three added to the US
pipeline
Agricultural real estate REIT Gladstone Land (LAND) set terms on
Friday for a relatively small $50 million IPO. The two previous
REIT IPOs have had mixed performance. Javelin Mortgage Investment
(JMI; $145 million IPO), which invests in mortgage-backed
securities, upsized its deal on October 2 but is currently
trading just below its offer price (down -0.4%). Spirit Realty
Capital (SRC; $435 million IPO), which leases retail and
restaurant properties, priced below the midpoint - but offered
extra shares - on September 19 and has gained 11%.
On Thursday, Artisan Partners Asset Management (APAM), an
investment management firm with $64 billion in assets under
management, revived its IPO aspirations by filing for a $250
million offering; the Milwaukee-based asset manager originally
filed for an IPO in April 2011 before withdrawing those plans at
the end of the year. Citigroup and Goldman Sachs are acting as
joint bookrunners for the IPO. Artisan's new filing followed the
recent launch of a $55 million IPO by Silvercrest Asset
Management (SAMG), an investment management firm with $11 billion
in AUM; Silvercrest aims to price its IPO the week of November
12.
Two profitable growth companies, both incorporated outside the
US, also filed for US IPOs last week. UBIC (UBIC), a Tokyo-based
litigation services company with expertise in Asian-language
electronic discovery and data forensics, filed for a $46 million
IPO on Thursday. The company, which is currently listed on the
Tokyo Stock Exchange, has seen its annual revenue jump from $14
million (FY March 2010) to $64 million (FY March 2012). Baird and
William Blair are listed as underwriters.
Luxembourg-incorporated GFI Software S.A. (GFIX), which provides
a suite of online collaboration, remote access, networking
monitoring and security software for small- and medium-sized
businesses, filed on Friday for a $100 million IPO. The company
has seen its revenue grow from $50 million in 2009 to $120
million in 2011. For the six months ended June 2012, revenue
increased 26% to $71 million. Because of upfront billings, GFI
Software generated over $50 million in free cash flow in 2011.
Insight Venture Partners and Bessemer Venture Partners own the
majority of the company. J.P. Morgan, Credit Suisse and Jefferies
are acting as joint bookrunners.
The
US IPO pipeline
now holds 127 companies looking to raise $38.0 billion. Of these,
52 have updated their filings within the past 90 days.
US IPO performance update
IPOs that have priced within the past 90 days have produced an
average total return of 14% and an average aftermarket return
(excluding first-day returns) of 2%. Of these 35 deals, 26 (74%)
are trading above their offer prices. Year to date, there have
been 121 IPOs, with an average total return of 17% and an average
aftermarket return of 3%.