Three deals are set to raise a combined $310 million in the week ahead. Two energy companies are coming to market, the sector's first IPO attempts since mid-May, when oil prices were on their way to hitting an 18-month low. Prices have since recovered +15%, and a large backlog of energy IPOs remains waiting in the pipeline.
Beyond this week, IPO activity should remain low to absent. Since 2012, the last two weeks of August have averaged just 1.4 deals. Nothing is currently on the calendar for the remainder of the month, however, we expect IPO activity to pick up again after Labor Day.
Deal Size($m)Market Cap($m)
Price RangeShares Filed
Morgan Stanley,Goldman Sachs
Developing peptide-based treatments for type 2 diabetes.
Contura EnergyBristol, TN
$23.00 - 27.006,000,000
Coal producer formed out of Alpha Natural Resources' restructuring.
Ranger Energy ServicesHouston, TX
$16.00 - 18.005,000,000
Credit Suisse,Simmons & Co.,Wells Fargo,
Provides well services for E&P companies in the Permian Basin.
Zealand Pharma ( ZEAL ), a Danish biotech that has been traded on the Nasdaq Copenhagen since 2010, is targeting $75 million at a $582 million valuation in a deal underwritten by Morgan Stanley and Goldman Sachs. Zealand focuses on the development of innovative peptide-based drugs. Its portfolio consists of two approved treatments for type 2 diabetes that are licensed to Sanofi. Zealand also has significant potential milestones (€652 million outstanding) from a collaboration with Boehringer Ingelheim, though the drugs just are still in the early stages of development. Additionally, adoption of its approved drugs has been slow and the global diabetes market is expected to decline through 2018.
Contura Energy ( CTRA ), a leading US producer of both thermal and met coal, is looking to raise $150 million at a $802 million valuation. Contura was formed in 2016 from Alpha Natural Resources' 2015 bankruptcy and operates six mine complexes with total reserves of over 1.3 billion short tons. Contura also operates a trading and logistics unit, in which it sells third party met coal through its 65% ownership of Virginia's Dominion Terminal. Contura has several growth opportunities through idle mines, but met coal prices are extremely volatile and 2018 EBITDA will decline as the pricing environment normalizes. Further, Insiders are selling 100% of the deal and received a $100 million dividend in July. Contura will be the third coal company to go public this year, following Ramaco Resources (METC -47% from IPO) in February and Warrior Met Coal (HCC +27% from IPO) in April.
Ranger Energy Servies ( RNGR ), a provider of well services for E&P companies in the Permian Basin, is targeting $85 million at a $240 million valuation. Formed by PE firm CSL in 2014, Ranger is a play on the increasing popularity of horizontal fracking wells. Post-IPO, it will own 123 rigs (122 of which are high-spec) and plans to accept delivery of 21 newbuilds from NOV in 2017, giving it one of the largest and youngest high-spec fleets. The business is highly cyclical and dependent on a stabilization in commodity prices to generate onshore E&P capex. However, insiders are buying up to $30 million on the IPO (35% of the deal).
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is up 23.6 % year-to-date, ahead of the S&P 500, which is up 10.6 % . Renaissance Capital's IPO ETF ( IPO ) tracks the index, and top ETF holdings include Ferrari (RACE) and First Data (FDC). The Renaissance International IPO Index is up 21.4 % year-to-date, while the ACWX is up 17.9 % . Renaissance Capital's International IPO ETF ( IPOS ) tracks the index, and top ETF holdings include ABN AMRO Group and Worldpay .
To find out if this is the best ETF for you, visit ourIPO Investing page . The article US IPO Week Ahead: Energy IPOs reignite ahead of August slowdown originally appeared on IPO investment manager Renaissance Capital's web site renaissancecapital.com.
Investment Disclosure: The information and opinions expressed herein were prepared by Renaissance Capital's research analysts and do not constitute an offer to buy or sell any security. Renaissance Capital, the Renaissance IPO ETF (symbol: IPO) or the Global IPO Fund (symbol: IPOSX) , may have investments in securities of companies mentioned.