US IPO Recap: 11 deals price in busiest week since November 2007, seven companies set terms

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US IPOs continued to make a strong showing this week, with 11 deals raising an aggregate of $1.6 billion in proceeds. It was the busiest week since the week of November 5, 2007, which saw 13 pricings. Performance was mixed, with an average total return of 7%; seven of the 11 deals were trading below their offer price by the end of the week. Momentum is expected to continue, with eight companies setting terms and nine US IPOs scheduled to price next week. Three companies submitted their initial filings with the SEC, adding to our active IPO pipeline, which now stands at 104 companies planning to raise an aggregate of $32.1 billion.

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IPO pricings (week of July 22, 2013)
=""> Company (Ticker) =""> Business ="" text-align:="" right;=""> Deal Size ($mm) ="" text-align:="" right;""=""> Price vs. Midpoint ="" text-align:="" right;""=""> Return
="">Agios Pharmaceuticals ( AGIO ) ="">Cancer biotech ="" text-align:="" right;="">$106 ="" text-align:="" right;="">20% ="" text-align:="" right;="">58%
="">Cellular Dynamics ( ICEL ) ="">Human cell company ="" text-align:="" right;="">$46 ="" text-align:="" right;="">-8% ="" text-align:="" right;="">-16%
="">Conatus Pharmaceuticals ( CNAT ) ="">Liver disease biotech ="" text-align:="" right;="">$66 ="" text-align:="" right;="">0% ="" text-align:="" right;="">-14%
="">Grana y Montero (GRAM) ="">Peruvian construction ="" text-align:="" right;="">$413 ="" text-align:="" right;="">-2% ="" text-align:="" right;="">-1%
="">Heat Biologics (HTBX) ="">Cellular vaccines ="" text-align:="" right;="">$25 ="" text-align:="" right;="">-9% ="" text-align:="" right;="">-8%
="">Jones Energy (JONE) ="">Oil and gas E&P ="" text-align:="" right;="">$188 ="" text-align:="" right;="">-17% ="" text-align:="" right;="">-7%
="">Liquid Holdings Group (LIQD) ="">Software startup ="" text-align:="" right;="">$29 ="" text-align:="" right;="">-10% ="" text-align:="" right;="">-16%
="">Marlin Midstream LP (FISH) ="">Midstream LP ="" text-align:="" right;="">$138 ="" text-align:="" right;="">0% ="" text-align:="" right;="">-3%
="">Onconova Therapeutics (ONTX) ="">Cancer biotech ="" text-align:="" right;="">$78 ="" text-align:="" right;="">15% ="" text-align:="" right;="">33%
="">Phillips 66 Partners LP (PSXP) ="">Phillips 66 LP ="" text-align:="" right;="">$378 ="" text-align:="" right;="">15% ="" text-align:="" right;="">49%
="">WCI Communities (WCIC) ="">Luxury homebuilder ="" text-align:="" right;="">$102 ="" text-align:="" right;="">-32% ="" text-align:="" right;="">4%

Health care streak continues, with mixed results
The health care streak continued this week, representing five of the 11 deals. Agios Pharmaceuticals ( AGIO ) was the top performer, surging 74% on its first day after pricing 20% above the midpoint of its originally  proposed range. The stock has since fallen 11% in the aftermarket, resulting in a total return of 54%. Agios replaced last week's OncoMed Pharmaceuticals (OMED) as the best first-day return for a biotech since Pain Therapeutics ( PTIE ) jumped 82% in its July 2000 debut. Onconova Therapeutics (ONTX), which is developing drug candidates for cancer, was also well-received, with a 33% first-day pop. The three remaining health care deals, Cellular Dynamics ( ICEL ), Conatus Pharmaceuticals ( CNAT ) and Heat Biologics (HTBX) did not fare as well, demonstrating investors' selectivity; all three ended the week below their offer prices.

This week also saw three energy IPOs: Marlin Midstream LP (FISH), Jones Energy (JONE) and Phillips 66 Partners LP (PSXP). The energy sector has been relatively quiet, with only eight deals year-to-date. The rest of the group was a diverse mix that included Peruvian engineering and construction company Grana y Montero (GRAM), Florida-focused luxury home developer WCI Communities (WCIC) and hedge fund software startup Liquid Holdings (LIQD). Grana y Montero managed to raise roughly $413 million despite recent poor performance of Peruvian stocks as well as emerging market stocks as a whole. Votorantim Cimentos, Brazil's largest cement producer with 37% market share, postponed its $3.4 billion IPO last month. WCI Communities priced its IPO at $15 after originally outlining a range of $21 to $23. Recent homebuilder offerings have struggled due to deal fatigue and rising rates. Liquid Holdings traded poorly after pricing its $29 million deal on Thursday; the extremely early stage venture has only generated $2 million in software sales since its April 2012 launch. Deals from the consumer, technology and financial sectors were notably scarce.


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IPOs setting terms (week of July 22, 2013)
=""> Company (Ticker) =""> Business ="" text-align:="" right;=""> Deal Size ($mm) ="" text-align:="" right;""=""> LTM Sales ($mm)
="">Ardmore Shipping (ASC) ="">Petroleum transporter ="" text-align:="" right;="">$160 ="" text-align:="" right;="">$26
="">Athlon Energy (ATHL) ="">Oil and gas E&P ="" text-align:="" right;="">$300 ="" text-align:="" right;="">$179
="">Control4 (CTRL) ="">Automation software ="" text-align:="" right;="">$64 ="" text-align:="" right;="">$113
="">Marrone Bio Innovations (MBII) ="">Pest mgmt products ="" text-align:="" right;="">$65 ="" text-align:="" right;="">$8
="">MiX Telematics (MIXT) ="">Fleet mgmt SaaS ="" text-align:="" right;="">$94 ="" text-align:="" right;="">$118
="">Sprouts Farmers Market (SFM) ="">Grocery chain ="" text-align:="" right;="">$278 ="" text-align:="" right;="">$1,875
="">YuMe (YUME) ="">Video ad firm ="" text-align:="" right;="">$65 ="" text-align:="" right;="">$123
="">Independence Realty Trust (IRT) ="">Apartment REIT ="" text-align:="" right;="">$42 ="" text-align:="" right;="">$16


IPO momentum continues as eight companies announce terms
Athlon Energy (ATHL), an Apollo-backed oil and gas E&P operating in the Permian basin, was the largest deal to launch this week, with an estimated deal size of $300 million. Sprouts Farmers Market (SFM) was a close second at $278 million. The fast-growing grocery chain, which differentiates itself through an open farmers market layout, has 163 locations and believes it has the potential to reach 1,200 in the long term. YuMe (YUME), which provides digital video advertising solution, announced terms in the wake of recent IPOs Tremor Video (TRMR) and Marin Software (MRIN). Both Tremor and Marin have traded down since going public. However, unlike both Tremor and Marin, YuMe was free cash flow positive in 2012 and the 1Q13.


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New IPO filers (week of July 22, 2013)
=""> Company (Ticker) =""> Business ="" text-align:="" right;=""> Deal Size ($mm) ="" text-align:="" right;""=""> LTM Sales ($mm)
="">Extended Stay America (ESH.RC) ="">Hotel operator ="" text-align:="" right;="">$750 ="" text-align:="" right;="">$1,045
="">West. Refining Logistics, LP (WNRL) ="">Midstream MLP ="" text-align:="" right;="">$288 ="" text-align:="" right;="">$0
="">Five Prime Therapeutics (FPRX) ="">Cancer biotech ="" text-align:="" right;="">$60 ="" text-align:="" right;="">$26

Three new filers added to the pipeline

Three companies submitted their initial IPO filings with the SEC this week. Extended Stay America (ESH.RC), which owns and operates 682 hotels located in 44 states in the US and Canada, filed to raise up to $100 million in its IPO, though we expect the deal size to be closer to the $500 million to $1 billion range. The company was bought out of bankruptcy in 2009 by PE backers Blackstone, Centerbridge and Paulson & Co. at a purchase price of $3.9 billion, and it is currently led by former Starbucks ( SBUX ) CEO Jim Donald. Extended Stay America is the second Blackstone-backed company to file within the last week; Blackstone's shopping center REIT Brixmor (BRX) filed for an IPO that could raise upwards of $700 million on July 18.

Western Refining Logistics, LP (WNRL), which had been in our Private Company Watchlist, filed to raise up to $288 million in its IPO. The limited partnership, formed by Western Refining to own midstream assets, will initially own approximately 300 miles of pipelines and 7.9 million barrels of active storage capacity, in addition to other assets. Five Prime Therapeutics (FPRX), a clinical stage biotech developing protein therapeutics for cancer and other inflammatory diseases, filed to raise up to $60 million. The company, which is backed by Pfizer, Advanced Technology Ventures and other VC firms, has already generated $220 million under collaboration agreements and could receive up to $435 million in future milestone payments for its lead drug candidate.

IPO market snapshot
The 110 IPOs in 2013 have raised $23.6 billion and produced an average return of 28%. There have been 66 IPOs in the past 90 days, with total proceeds of $12.5 billion and an average return of 27%. The active IPO pipeline includes 104 companies looking to raise $32.1 billion.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: News Headlines , IPOs

Referenced Stocks: AGIO , CNAT , ICEL , PTIE , SBUX

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