Three companies, one of which priced, set terms last week, as
dividend-paying IPOs continued to sustain an otherwise chilled US
market. Including Western Gas Equity Partners LP (WGP), which
gained 27% in its first day of trading after an abbreviated
roadshow, more than $1 billion was added to the
US IPO calendar
. Filings also picked up after a two week lull, with two large
PE-backed deals added to the
US IPO pipeline
. Taylor Morrison (TMHC), a top ten US homebuilder, and Taminco
(TGC.RC), a global chemicals company, each filed to raise up to
$250 million. Both companies are profitable and generate over $1
billion in sales.
Western Gas marks another LP success
Western Gas Equity Partners LP raised $378 million in an upsized
deal by offering 17.2 million shares (up from 15 million) at $22,
above the range of $19 to $21. The stock opened for trading up
24% and climbed further on its first day before closing at $28,
up 27%. It was the best first day performance for an LP IPO
year-to-date. Barclays, Citi, Deutsche Bank and Morgan Stanley
were the joint bookrunners.
Western Gas Equity Partners LP holds general partner interests
and 46% of the LP interests in Western Gas Partners LP (
), which itself provides midstream natural gas and NGL services
in the US and is sponsored by major E&P Anadarko Petroleum (
). The deal was the sixth yield play out of the last ten IPOs;
all but one is trading up (19% average return).
Two more yield plays added to the calendar
In what was likely the last week for deals to move forward in
2012, PBF Energy (PBF) and Silver Bay Realty Trust (SBY)
announced plans to price this week. PBF Energy is looking to
raise $429 million. Backed by Blackstone and First Reserve, which
formed the company in 2008, it is the 5th largest US independent
refiner, with refineries in Ohio, Delaware and New Jersey.
Executive Chairman Thomas O'Malley was previously the CEO of
Premcor and Tosco, two large, then-public refiners that were
acquired in multi-billion dollar deals. Citi, Morgan Stanley,
Credit Suisse and Deutsche Bank are the joint bookrunners.
Silver Bay Realty Trust, a REIT focused on single-family homes,
is being carved out from publicly-traded mortgage REIT Two
). The company is hoping to raise $252 million. Credit Suisse,
BofA Merrill Lynch and J.P. Morgan are the joint bookrunners.
Large homebuilder files for $250 million IPO
Taylor Morrison Home Corporation, one of North America's top ten
filed on Wednesday for a $250 million IPO
. In 2011, PE firms TPG and Oaktree Capital (OAK) and Canadian
investment company JH Investments formed TMM Holdings, which
acquired Taylor Morrison from Taylor Wimpey (
), a UK-based homebuilder, for $955 million. Revenue totaled $1.3
billion during the twelve months ended September 30, 2012. Credit
Suisse and Citi are the joint bookrunners.
With the US housing market seeing positive signs of a
long-awaited recovery, Taylor Morrison hopes to become the latest
IPO to tap what appears to be increasing investor appetite for
pure-play investment opportunities in the sector. Major
residential real estate broker Realogy (RLGY), an Apollo-backed
LBO, went public in October and is currently up 40% from its
offering. IPOs from online real estate portals Zillow (Z) and
Trulia (TRLA) were also well-received by investors. US
homebuilders - from Toll Brothers (
) and Lennar (NYSE: LN) to D.R. Horton (DHI) and KB Home (KBH) -
have rallied 45% to 110% year-to-date.
Chemical company revives offering
Taminco Global Chemical, the world's largest producer of
alkylamines, also filed for a $250 million IPO. The company,
whose products are used in a range of industrial, agricultural
and pharmaceutical applications, is hoping to go public after
nearly ten years in the hands of private equity firms. Formed in
a 2003 carveout from biopharma UCB, it was acquired by CVC
Capital Partners for 800 million euros in 2007. Following a
failed IPO attempt in Brussels in 2010, Apollo bought it for $1.4
billion in late 2011. Sales were $1 billion for the twelve months
ended September 30, 2012.
Following the Taylor Morrison and Taminco filings, the US IPO
pipeline holds 115 companies looking to raise $33.0 billion. Of
these, 44 companies have filed updates within the past 90 days.
Healthcare (11 companies), technology (9) and financial (8)
companies account for nearly two-thirds of the most active
New insider buying for SolarCity deal
One of last week's updates came from SolarCity (SCTY), which is
expected to price this week. Late Friday afternoon, the solar
panel installer announced reduced grant valuations by the
Treasury and that Chairman Elon Musk would buy $15 million of
shares on the IPO. The new insider buying (the reserved share
program was also increased) raises questions about investors'
demand for the deal, which is hoping to reverse the trend of
underperforming clean tech IPOs. In 2012, three clean-tech IPOs
have all priced well below the range, yet they have produced an
average return of -55%. Four other companies, BrightSource Energy
(BRSE), Luca Technologies (LUCA), Enerkem (NRKM) and Smith
Electric Vehicles (SMTH), have withdrawn offerings.
US IPO performance update
The quick turnaround of busted IPO Ruckus Wireless (RKUS), a
rapidly growing Wi-Fi equipment provider, helped push up IPO
market returns last week. Ruckus gained 33% last week, helped in
part by an IDC report on the enterprise WLAN market indicating
continued strong industry growth and market share gains for
Ruckus. After falling 18% in its first day of trading, Ruckus is
now up 17% from its offer price and an impressive 44% from its
first day close, giving it the third best aftermarket performance
among all IPOs priced within the last 90 days. Wall Street
research is expected this week, which could provide a further
boost for the stock.
Overall, IPOs from the past 90 days have produced an average
total return of 18% (vs. 17% last week) and an average
aftermarket return of 6% (vs. 5% last week). Year-to-date, 125
IPOs (equal to 2011's total deal count) have
raised $41.8 billion
. The average total return is 16%, and the average aftermarket
return is 2%.