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Weekly recap: 2013 US IPO calendar builds quickly
By: Renaissance Capital
Throughout the past decade,
US IPO pricings
have fallen in January after heavy end-of-the-year activity, but
2013 appears likely to break the trend. Following December's four
pricings, nine deals are already on the
for January, including five scheduled to price this week. Last
week, as the VIX hit a five-year low, six companies set terms and
launched deals. Half of the new deals are from MLPs, and five of
the six are expected to price this week. Early Monday, Bright
Horizons (BFAM), which provides employer-sponsored child care
services, set terms for a $202 million IPO.
A REIT for outsourced data centers
CyrusOne (CONE), which operates data center REITs primarily in Texas and Ohio, set terms for a $281 million IPO. The Cincinatti Bell carve-out will attempt to capitalize on investor interest in this sector caused by the ongoing shift to outsourced data center infrastructure. Comparable companies, such as Digital Realty Trust ( DLR ) and DuPont Fabros Technology ( DFT ), have vastly outperformed the broader markets since November. In particular, close peer CoreSite Realty (COR) is currently trading at an all-time high and is up over 40% from its mid-November price.
Hoping for a cruising recovery
Owned by Asian cruise and gaming company Genting HK and PE firms Apollo and TPG, Norwegian Cruise Line (NCLH) is the third largest cruise line operator in North America behind Carnival ( CCL ) and Royal Caribbean ( RCL ). The company, which is looking to raise $400 million, is planning on adding three new ships to its 11-ship fleet over the next three years. It is betting on a recovery in demand after a tough macro environment coupled with the Costa Concordia disaster caused top-line growth to decelerate meaningfully in 2012.
The LP wave continues
Like CyrusOne, the LPs will also seek to take advantage of strong performance by their peers. Since September, nine LPs have have gone public, of which eight have traded up and three have risen by more than 40%. CVR Refining LP (CVRR), which is set to be the largest of the five deals at $500 million, should also be encouraged by the strong performance of refiner PBF Energy (PBF), which has traded up 8% since its December debut. Icahn Enterprises has indicated an interest in buying $100 million on the offering. SunCoke Energy Partners LP (SXCP) produces metallurgical coke used in steel production and set terms for a $270 million deal. USA Compression Partners (USAC), which provides natural gas compression services, originally filed for an IPO in June 2011 and was likely encouraged to launch its deal after the run of successful LP IPOs.
The sixth company to set terms last week, LipoScience (LPDX), provides an LDL diagnostic test to assess cardiovascular disease risk. The company, which plans to raise $70 million, previously attempted to go public in 2002.
Five companies added to the pipeline
Pipeline activity was also robust in the first full week of the new year. Five companies, tied for the highest weekly total since August, added more than $800 million to the US IPO pipeline. The biggest deal came from Brazilian offshore driller QGOG Constellation (QGOG), which filed for a $500 million IPO. The company had $747 million in sales for the twelve months ended September 30, more than 90% of which came from Petrobas ( PZE ). QGOG first filed confidentially in April 2012.
ZAIS Financial (ZFC), a REIT investing in agency and non-agency RMBS, filed for a $140 million IPO. The company is externally managed by a subsidiary of ZAIS Group, an investment adviser with $5.5 billion AUM, and filed confidentially in November. 3D printer manufacturer ExOne (XONE), New Jersey bank ConnectOne Bancorp (CNOB) and money transfer service provider Xoom (XOOM) filed to raise $75 million, $58 million and $50 million, respectively.
The US IPO pipeline now holds 122 companies looking to raise $36.7 billion. Of these, 53 have released updates within the past 90 days.
US IPO market performance update
Activity may have been light at the end of 2012, but IPO returns have soared, which should provide a tailwind to 2013's first IPOs. US IPOs from the past 90 days have produced an average total return of 30% and an average aftermarket return of 17%. All ten deals from November and December are trading above their offer price.