US IPO market
saw a jolt of activity last week, as nine companies set terms and
eight submitted initial filings. The newly scheduled deals
included two $500 million offerings, from top US homebuilder
Taylor Morrison (
) and leading satellite service provider Intelsat (
), and the new filings were the most in more than a year. The
spike in filing activity featured four very fast-growing
technology companies, including three enterprise software vendors
and a next-generation telecom equipment supplier. Independent
Bank Group (
), a small Texas bank, was the week's lone
. It priced at the high end of the range to raise $83 million,
and traded up 10%.
Two large, private equity-backed deals from Taylor
Morrison and Intelsat
Taylor Morrison Home Corporation, an Oaktree (
) and TPG-backed US homebuilder, is the third IPO this year
expecting strong growth because of the US housing recovery. The
previous two have performed well: Boise Cascade (
) is up 47%, and TRI Pointe Homes (TPH) has gained 14%. Intelsat,
the world's largest provider of satellite services to businesses,
booked $2.6 billion in sales in 2012 and is backed by private
equity firms BC Partners and Silver Lake.
Yield play activity continues
Nearly half of first quarter IPOs paid a dividend, and two more
yield plays were added to the calendar last week. Hannon
Armstrong Sustainable Infrastructure Capital (HASI), a structured
REIT that provides financing for clean energy projects, expects
to raise $200 million. KNOT Offshore Partners (KNOP), an LP
backed by a Norwegian/Japanese joint venture, owns four shuttle
tankers that transport crude oil under long-term charters. It
plans to raise $149 million.
Apollo-backed Taminco and Hurricane Sandy-affected
Fairway Market move forward
Taminco Corporation (TAM), the top global producer of alkylamines
for industrial and agricultural applications, announced terms for
a $300 million deal. Carved out of biopharmaceutical company UCB
in a 2003 sale to private equity firm AlpInvest Partners, Taminco
was sold to private equity firms CVC Capital Partners in 2007 and
current owner Apollo (APO) for $1.4 billion in 2011. The company
previously tried to raise close to $500 million in an IPO on the
Euronext Brussels in early 2010.
Fairway Group (FWM), which operates 12 high-end grocery stores in
the greater New York City area and plans to open two additional
stores in 2013, launched a $150 million deal. The Sterling
Investment Partners-backed company had delayed its deal in late
2012 because of Hurricane Sandy, which forced one of its 12
stores to close for four months.
Rally Software leads a group of smaller deals
Fast growing Rally Software (RALY), which provides on-demand
software to manage Agile-based software development projects, is
seeking $69 million. Its primary venture capital backers include
Boulder Ventures, Mobius and Mohr Davidow Ventures. Two
development-stage biotechs also set terms. Omthera
Pharmaceuticals (OMTH), which is developing therapies for
abnormalities in blood lipids, plans to raise $75 million.
Chimerix (CMRX), which is developing a potent antiviral therapy
for use in stem cell transplants, hopes to raise $85 million.
Most initial filings since passage of JOBS Act
New filing activity has shot up recently, with 20 deals added to
in the past three weeks (out of 43 total new filings
year-to-date). The eight new filers last week were the most since
the week of March 19, 2012, shortly before the passage of the
JOBS Act created the confidential filing process. All of the new
deals were small, proposing deal sizes of $150 million or less,
and at least seven of the eight were previously confidential
filers that could launch offerings before the end of the month.
Additionally, four of the eight were high-growth technology
deals, which were mostly absent in the first quarter.
Much anticipated offerings from Tableau and
Tableau Software (DATA), which provides interactive data
visualization software, filed for a $150 million IPO. Backed by
venture capital firm New Enterprise Associates and its three
founders, Tableau has grown sales at a 91% CAGR since 2009, more
than doubling revenue in 2012 to $128 million, and it has been
profitable for the past three years. Among the largest of its
approximately 11,000 customers are several industry leaders,
including Verizon (VZ), GlaxoSmithKline (GSK), DuPont, Nike
(NIKE) and BBC.
Marketo (MKTO), which provides on-demand marketing software for
B2B professionals, filed to raise up to $75 million. Sales
increased 80% to $58 million in 2012 while the customer base
expanded to over 2,000 enterprises. The company has yet to
realize any profits, having lost $34 million in 2012. Notable
venture capital backers include InterWest Partners, Storm
Ventures, Mayfield Funds, Institutional Venture Partners and
Battery Ventures. In December 2012, recent IPO and competitor
Eloqua (ELOQ) was acquired by Oracle (ORCL) for $871 million,
representing a 104% premium from its August 2012 offer price.
Displaying equally explosive growth, Cyan (CYNI) and Textura
(TXTR) filed for $75 million and $50 million IPOs, respectively.
Cyan provides next generation packet-optical transport systems
for software-defined networks (SDNs), and generates revenue both
from hardware sales and from software subscriptions and licenses.
Founded by a team from broadband equipment supplier Calix (CALX),
Cyan booked $96 million in 2012, a 137% increase year-over-year,
and is backed by several venture capital firms, including
Norwest. Textura, which provides an online collaboration platform
for the construction industry, grew revenues 106% to $22 million
in its 2012 fiscal year.
Four other filers include Californian homebuilder and
Seeing the success of TRI Pointe (TPH), Boise Cascade (
) and hopefully Taylor Morrison, northern Californian homebuilder
UCP (UCP) filed for a $125 million IPO. Ellington Residential
Mortgage REIT (EARN), a mortgage REIT investing in Agency and
non-Agency RMBS, filed for a $100 million IPO. The company was
formed through a strategic venture between affiliates of
Ellington Financial (EFC) and Blackstone (BX). All three mortgage
REIT IPOs to price in 2013 have struggled: ZAIS Financial (ZFC)
is down 3%, Five Oaks Investment (OAKS) is down 0.4% and Orchid
Island Capital (ORC) is trading 7% below its offer price.
Biotech Receptos (RCPT) is looking to raise $86 million to fund
clinical trials of its Phase 3 drug candidate for relapsing
multiple sclerosis. Finally, TriState Capital (TSC), a bank
serving middle market businesses in the Northeast, filed for a
$70 million IPO. It hopes to capitalize on the moderately
successful receptions seen by two other regional bank IPOs in
2013: NJ-based ConnectOne Bancorp (CNOB; up 6%) and Texas-based
Independent Bank Group (IBTX; up 10%).
US IPO market performance update
Although they continue to outpace the broader markets,
US IPO returns
have fallen slightly over the past two weeks. The total average
return for the year's 32 IPOs is 17%, down from 19%, and the
average aftermarket return is 3%, down from 5%. Total proceeds
are up 26% year-over-year to $7.7 billion.