After seven consecutive weeks of IPO pricing activity, the
second longest streak since 2010, three companies delayed or
postponed their offerings last week. Each company on the calendar
was either early in development or newly formed, and all three
deals had already been pushed back following Hurricane Sandy. The
continued to build though, as four companies, including two
high-growth technology companies, set terms. The week also saw
four companies, led by the US arm of financial services giant ING
Group, make their first
, adding an estimated $1.5 billion to the IPO pipeline.
Previously delayed deals postponed
Auction marketplace rollup Taylor & Martin Group (
), diagnostics company Singulex (
) and biotech Radius Health (RDUS) had planned to price their
deals on Wednesday. However, the uncertainty around these
developing companies and a weak day in the markets (the S&P
fell 2.4%) conspired to keep investors away. Taylor & Martin
intended to complete its offering only if it could fund all of
its planned acquisitions and had limited scope to cut its offer
price. Singulex, despite strong revenue growth in its
cardiovascular testing segment, was investing heavily in a
second-generation product that was not expected to launch until
Both Taylor & Martin and Singulex postponed their offerings.
Radius Health, which is developing treatments for osteoporosis
but generates no revenue, now plans to price this week.
Four companies added to the IPO calendar
Hoping to be the first Chinese company to complete a US IPO since
Vipshop Holdings (VIPS; priced on March 22, 2012), social
platform YY Inc. (YY) set terms for a $90 million IPO. The
company provides a popular online group communication service,
sells online game tokens and recently entered into music. Revenue
is up 168% YTD to $88 million, while adjusted net income jumped
nearly 7x to $21 million. Venture backers include Morningside,
Steamboat Ventures, Granite Global and Tiger Global. Morgan
Stanley, Deutsche Bank and Citi are acting as joint bookrunners.
Wi-Fi equipment provider Ruckus Wireless (RKUS) set terms for a
$98 million US IPO. Ruckus's systems provide up to 4x the range
of basic Wi-Fi and are sold to more than 17,000 enterprise and
cable and mobile service providers. Revenue increased 85% to $56
million in the third quarter, while operating income more than
doubled to $6 million. Sequoia Capital is its primary venture
backer. Goldman Sachs and Morgan Stanley are the joint
Alon USA Partners (ALDW) set terms for a $200 million IPO and
became the eighth midstream energy LP added to the calendar since
September. Formed in August 2012 by parent company Alon USA
), it operates a crude oil refinery in Texas and markets its
products in the Southwest.
Ruckus is expected to price this week, while YY and Alon USA
Partners are scheduled for the week of 11/19. Agricultural REIT
Gladstone Land (LAND), which set terms for a $50 million IPO two
weeks ago without timing, is now expected to launch its deal in
ING files for potential $1 billion IPO
ING US (ING.RC), a subsidiary of ING Group, filed for its widely
anticipated US IPO on Friday. The retirement, investment and
insurance company serves 13 million customers in the US and
generated revenue of $9.3 billion in the last twelve months. We
estimate that the deal size, listed as $100 million in the
filing, could exceed $1 billion. Morgan Stanley and Goldman Sachs
are acting as joint bookrunners.
Three other companies made initial filings: Translation software
provider Babylon (BBYL), which already trades in Israel under the
same ticker, filed for $115 million US IPO. The company is in the
middle of a two-year agreement with Google, which has accounted
for 84% of the $121 million of year-to-date revenue. The
company has been profitable for each of the last three fiscal
years and generated a year-to-date EBITDA margin of 18%. Citi and
Jefferies are the joint bookrunners on the deal.
Midstream energy LP Western Gas Equity Partners (WGP) filed for a
$362 million IPO. The company's general partner is Western Gas
Partners, LP (
), which itself is owned by Anadarko Petroleum (
). Barclays and Citi are the joint bookrunners. Finally, biotech
Enanta Pharmaceuticals (ENTA), which is developing treatments for
hepatitis C, filed for a $69 million IPO. J.P. Morgan and Credit
Suisse are the joint bookrunners.
The US IPO pipeline now holds 129 companies looking to raise
$39.2 billion. In the past 90 days, 51 companies have updated
their IPO filings.
US IPO performance update
The weak market last week served to extend a slide in recent IPO
performance. IPOs from the past 90 days have an average total
return of 13% (vs. 20% three weeks ago) and an average
aftermarket return (excluding first-day returns) of 0.2% (vs.
8%). Whereas 84% of recent IPOs were trading above their offer
prices three weeks ago, just 68% are today.
Year-to-date performance has also fallen off. The average total
return for US IPOs this year is 13% (vs. 20% three weeks ago) and
the average aftermarket return is -0.4% (vs. 5%).
121 US IPOs
have raised $41 billion, compared with 106 having raised $31
billion at this point last year.