US IPO Recap: Coty fades, Gigamon springs and 17 companies file or set terms

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For the fifth consecutive week, at least one US IPO gained 30%, as Gigamon ( GIMO ) climbed nearly 50%. The week's most prominent IPO, Coty ( COTY ), faltered though, and the third scheduled deal, Aratana Therapeutics ( PETX ) was delayed. Nine more IPOs, including a billion dollar offering from the industrial distributor HD Supply ( HDS ), were packed onto the IPO calendar , pushing the number of deals expected for the rest of the month to 14. With 48 deals already priced, the second quarter could see 60 IPOs for the first time since 2000.


IPO pricings (week of June 10, 2013)
Company (Ticker) Business Deal Size ($mm) Price vs. Midpoint Return
Coty ( COTY ) Fragrance and cosmetics $1,000 0% 0%
Gigamon ( GIMO ) Data traffic management $128 0% 40%

In the largest consumer IPO since 2011, Coty struggles
Coty, a fragrance and cosmetics company with several globally recognized brands, raised $1.0 billion in the largest consumer IPO since Arcos Dorados' $1.3 billion IPO in 2011. Despite the superior returns (more than 30% on average) of global beauty companies over the past year, Coty fell 1% on its first day. It broke a streak, dating to November 2012, of five highly successful consumer IPOs (RH, NCLH, PF, FWM and SEAS), which have gained 69% on average (worst is 26%), with all rising more than 10% on their first days. Possible contributors to Coty's poor performance were its slow growth (2% year-to-date, excluding changes in currency rates) and its struggles with acquisitions, including a $930 million purchase of Philosophy in 2010 that was written down by $515 million less than two years later.

Gigamon gains 49% on first day
Gigamon, by contrast, kept alive an even better streak for technology IPOs, becoming the sixth straight (after DATA, MKTO, ECOM, LITB and TXTR) to jump more than 20% on the first day of trading. The data traffic management company's first-day gain of 49% was the fifth best of 2013. Gigamon has been growing rapidly, increasing sales by 58% in the first quarter. Although it has invested heavily in sales and marketing (48% of sales in the first quarter), it has also been profitable since 2006, and its heavy repeat business has created substantial visibility.


IPOs setting terms (week of June 10, 2013)
Company (Ticker) Business Deal Size ($mm) LTM Sales ($mm)
CDW ( CDW ) Technology products retailing $600 $10,221
Esperion Therapeutics (ESPR) Cholesterol control $63 $0
GDC Technology (GDCT) Digital cinema servers $75 $125
Gogo (GOGO) In-flight WiFi $176 $250
HD Supply ( HDS ) Industrial distribution $1,250 $8,267
Luxoft Holding (LXFT) Software development services $70 $315
NanoString Technologies (NSTG) Genomic diagnostics $76 $24
Silvercrest Asset Management Group (SAMG) Investing for wealthy individuals $62 $53
Tremor Video (TRMR) Video advertising $90 $113

HD Supply launches $1.2 billion IPO
Formerly the professional services division of Home Depot, HD Supply was acquired in 2007 for $8.5 million in an LBO by Bain Capital, The Carlyle Group (CG) and Clayton, Dubilier & Rice. It operates 600 locations in the US and Canada and booked revenue of $2.1 billion in the first quarter. The product of another 2007 LBO, CDW ( CDW ) was acquired by Madison Dearborn and Providence Equity for $7.3 billion. A second Carlyle-backed company, GDC Technology (GDCT), was the second company from China, after LightInTheBox (LITB; +79%), to launch a US IPO this year.

Gogo (GOGO) serves nine of the ten WiFi-equipped airlines in North America and has grown rapidly since 2010 (57% CAGR). Silvercrest Asset Management (SAMG) previously set terms in October 2012 but its initial pricing date fell in one of 2012's worst weeks for IPOs, when three of four deals (including Silvercrest) postponed and the fourth, Ruckus Wireless (RKUS), fell 18% on its first day. Luxoft Holding (LXFT) is being carved out of IBS Group and is hoping to duplicate the success of its fellow Russian IT services provider EPAM Systems (EPAM), which is up 108% since its February 2012 IPO. Finally, Esperion Therapeutics (ESPR) is looking to take advantage of a hot market for biotechs. Its Executive Chairman co-discovered Lipitor, the best-selling prescription drug in history.


New IPO filers (week of June 10, 2013)
Company (Ticker) Business Deal Size ($mm) LTM Sales ($mm)
Agios Pharmaceuticals (AGIO) Cancer and metabolism $86 $25
Antero Resources (AR) E&P in WV, OH and PA. $1,000 $246
Conatus Pharmaceuticals (CNAT) Liver disease $69 $0
Diamond Resorts International (DRII) Vacation club $200 $568
Envision Healthcare (EVH) Outsourced medical services $100 $6,032
International Automotive Components Group (IACG) Supplying auto parts $115 $0
Midcoast Energy Partners, LP (MEP) Natural gas assets $575 $6,529
OCI Partners, LP (OCIP) Methanol production $480 $310
Onconova Therapeutics (ONTX) Cancer treatments $75 $47
Stock Building Supply Holdings (STBS.RC) Wood products $175 $1,003
The New Home Company (NWHM) Homebuilding in California $173 $67

IPO pipeline builds with eleven new filings
A rush of eight new filings on Friday afternoon brought June's total to 19, making it the third straight month with 19 or more filings. The monthly high for the previous eighteen months was 18. Last week's largest filer was Antero Resources, an independent oil and gas E&P which is seeking $1.0 billion. Envision Healthcare traded on the NYSE as Emergency Medical Services until it was acquired in 2011 for $3.2 billion by Clayton, Dubilier & Rice.

IPO market snapshot

The 79 IPOs in 2013 have raised $18.3 billion and produced an average return of 20%. There have been 56 IPOs in the past 90 days, with total proceeds of $12.4 billion and an average return of 19%. The active IPO pipeline includes 118 companies looking to raise $34.4 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: CDW , COTY , GIMO , HDS , PETX

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