Three deals priced last week to push 2012's deal count past
2011's, but the investor response was mostly muted. Although Elon
Musk-backed SolarCity (
) had the tenth-best first-day gain of the year, the solar panel
installer was forced to cut its price range by 43%. The other two
US IPOs priced
within the range but had weak early trading.
SolarCity gains after sharp valuation cut
SolarCity jumped 47% on its first day of trading, but the pricing
was delayed after investors balked at the originally proposed
valuation. The company raised $92 million after pricing at $8,
far below the proposed range of $13 to $15, but closed the week
slightly below $12. Insiders, including Elon Musk, who bought $15
million, purchased 32% of the deal. Goldman Sachs, Credit Suisse
and BofA Merrill Lynch were the joint bookrunners.
The IPO market for cleantech has been a challenging one in 2012,
with only four IPOs completed out of eight attempted offerings.
Trading has been very negative for the three prior completed
deals, Enphase Energy (ENPH; -46%), Ceres (CERE; -70%) and
Renewable Energy Group (REGI; -38%).
PBF Energy upsizes deal
PBF Energy (
), the fifth-largest US independent refiner, raised $520 million
in the largest deal of the week, after offering an extra 3.5
million shares at the midpoint. The stock gained less than 1
percent on its first day of trading, although it rose another 3%
on Friday. Recent refining LP IPOs have performed strongly:
Northern Tier Energy (
) is up 69% from its July IPO, and Alon USA Partners (
) is up 36% from its November IPO. Citi, Morgan Stanley, Credit
Suisse and Deutsche Bank were the joint bookrunners.
Silver Bay Realty Trust falls in debut
Silver Bay Realty Trust (
), a newly organized REIT focused on single-family properties,
broke its IPO price, falling 1% on its first day of trading on
Friday. The company raised $245 million by pricing slightly below
the midpoint. Mortgage REIT Two Harbors Investment (TWO) is
contributing 3,100 properties, mostly in Arizona, Florida and
Georgia. Credit Suisse, BofA Merrill Lynch and J.P. Morgan were
the joint bookrunners.
Pipeline activity limited to a trio of small
Professional Diversity Network (IPDN), which provides social
networking for minority professionals, set terms on Friday to
raise $10 million. Revenue was $6 million for the twelve months
ended September 30, 2012. An exclusive agreement with online
recruiting company Monster Worldwide (MWW), which has generated
63% of revenue, is being replaced with a non-exclusive agreement
with LinkedIn (LNKD) at the end of the year. Aegis Capital is the
North Atlantic Drilling (NADL), which operates a fleet of nine
offshore drilling rigs, filed for a $40 million IPO. The company,
which is already OTC-listed in Oslo, was formed by Seadrill
(SDRL) in February 2011 and booked $997 million in revenue for
the twelve months ended September 30, 2012. Morgan Stanley is the
Harvard Apparatus Regenerative Technology (HART), which produces
tools used in creating replacement tracheas, filed for a $20
million IPO. The Harvard Bioscience (HBIO) subsidiary has not
generated any revenue and hopes to obtain EU approval in 2015.
Summer Street Research Partners is the lead bookrunner.
US IPO pipeline
now consists of 114 companies looking to raise $34.2 billion.
Zoetis plans to raise up to $4 billion as early as January or
February. In the past 90 days, 42 companies have updated their
filings with the SEC.
IPO performance update
Although issuance has been slow, with the second-lowest number of
deals in December since 2002 (4 vs. 10-year average of 15),
returns have been strong recently. IPOs from the past 90 days
have produced an average total return of 20% and an average
aftermarket return of 7%. Year-to-date,
(up 2% y/y) have raised $42.6 billion (up 18%). The average total
return is 17%, and the average aftermarket return is 3%.