In the strongest showing of today's IPO group, Forum Energy Technologies, a global products and services provider for the oil and natural gas industries, raised $379 million by offering 18.9 million shares (21% insider) at $20, at the high end of the proposed $18 to $20 range. The company had originally planned to offer 15.8 million shares (17% insider). Private equity firm Tinicum LP is expected to invest $50 million in a concurrent private placement. Forum Energy Technologies plans to list on the NYSE under the symbol FET. J.P. Morgan, BofA Merrill Lynch, Credit Suisse, Citigroup, and Deutsche Bank Securities acted as lead managers on the deal.
Forum Energy Technologies began as Access Oil Tools in 1985. Houston-based private equity firm SCF Partners acquired the company in May 2005 and reorganized it as Forum Oilfield Technologies. FOT filed for a $345 million IPO in October 2007, but market conditions led it to withdraw in February 2008. In August 2010, SCF Partners combined FOT with four other portfolio companies, creating Forum Energy Technologies. The current deal began in August 2011 with a filing for $300 million. SCF Partners is selling 5% of its stake will hold 59% of shares after the offering. In 2011, revenue rose 51% to $1.1 billion thanks to the completion of eight acquisitions during the year (organic growth was 23%) and higher drilling activity, spurred by an increase in oil prices. The acquisitions contributed to a 340 basis point improvement to 32% in gross margin and a 590 basis point improvement to 16% in operating margin. Net income for the year was $94 million.
Also expected to debut today are MRC Global and Oaktree Capital Group. MRC Global, the largest global pipes, valves and fitting (PVF) and services supplier to the energy industry, raised $477 million by offering 23 million shares (25% insider) at $21, the low end of the range of $21 to $23. MRC Global will list on the NYSE under the symbol MRC. Goldman Sachs and Barclays acted as joint bookrunners on the deal.
Oaktree Capital Group, an alternative asset manager focused on debt with $75 billion in AUM, priced 8.8 million shares at $43, the low end of the $43-$46 range. The company had originally planned to offer 11.25 million shares, resulting in a total deal size 24% below that originally planned. All of the IPO proceeds are being used to redeem insider shares. Goldman Sachs and Morgan Stanley were the bookrunners on the offering, which is scheduled to list on the NYSE under the ticker OAK.
Two others that had planned IPOs for this week have cancelled or delayed their offerings. Aleris Corporation, a global manufacturer of aluminum products and specification alloys, postponed its IPO on Wednesday. The Beachwood, OH-based company was founded in 2004 and booked $4.8 billion in sales for the 12 months ended 12/31/2011. J.P. Morgan, Barclays Capital and Deutsche Bank Securities were set to be the lead underwriters on the deal.
BrightSource Energy, which develops utility-scale solar thermal power plants, withdrew its plans for an initial public offering on Thursday, citing poor market conditions. The company had been scheduled to sell 6.9 million shares at a price range of $21-$23 on Wednesday evening. Goldman, Sachs & Co., Citi, and Deutsche Bank Securities were set to be the lead underwriters on the deal.
BrightSource's withdrawal shows that, despite the uptick in IPO activity so far this year (47 IPOs priced, up from 36 in the year-ago period) and the strong returns they have shown (the FTSE Renaissance IPO Index is up 15.1% YTD), investors continue to be discerning. In particular, BrightSource is the third alternative energy IPO to be pulled or delayed in recent weeks, following after Luca Technologies (LUCA) and Enerkem (NRKM). Investors continue to be skeptical of relatively early-stage companies with unproven technology that are spending significantly as they move toward commercialization. BrightSource's postponement may also reflect negative sentiment resulting from the high-profile bankruptcy of Solyndra, another solar company that, like BrightSource, was a beneficiary of DoE loan guarantees.
Yesterday's lone IPO, Erickson Air-Crane, which provides aerial firefighting and timber harvesting service on heavy-lift helicopters, ended flat after pricing its offering at the low end of the downwardly revised range. There are currently six deals on the IPO calendar for next week.
