With last Thursday's Fed announcement lifting the markets and the VIX falling below 15, the window for IPOs opened up further last week. Five companies, including three from the financial sector, set terms, expanding the officially marketed US IPO calendar to 10 deals. At least four more, including the highly anticipated IPO from on-demand HR software provider Workday (WDAY), could be added this week under the new confidential filings timeline.
New banks look to pick up distressed assets
Two regional banks, both founded in 2009 with significant financial backing to acquire struggling, undercapitalized banks at attractive prices, set terms last Monday to raise a combined $400 million. Capital Bank Financial (CBF) aims to build a $30 billion bank in the southeastern US, while National Bank Holdings (NBHC) is expanding in the Midwest. Both companies are led by former top executives of Bank of America.
Spirit Realty Capital (SRC), a noninvestment-grade retail and restaurant-focused REIT, and Susser Petroleum Partners (SUSP), a wholesale distributor of motor fuels, also set terms on Monday. On Wednesday, Qualys (QLYS), which provides information security and compliance software, filed terms for a $91 million deal.
US IPO setting terms last week (9/10 - 9/14)
| Company (Ticker) | Business | Deal Size ($mm) | Pricing Date |
|---|---|---|---|
| Spirit Realty Capital (SRC) | Retail and restaurant REIT | $460 | Week of 9/17 |
| Capital Bank Financial (CBF) | Southeastern US bank | $250 | Week of 9/17 |
| Susser Petroleum Partners (SUSP) | Motor fuel distributor | $190 | Week of 9/17 |
| National Bank Holdings (NBHC) | Midwestern US bank | $150 | Week of 9/17 |
| Qualys (QLYS) | Security software | $91 | Week of 9/24 |
Several confidential filers, including Workday, positioned to launch
Two companies on the calendar, Trulia (TRLA) and Regulus Therapeutics (RGLS), launched their deals exactly 21 days after making their first public filing, which is the minimum amount of time required under the new confidential review process made possible by the JOBS Act. If it chooses to do the same, Workday (WDAY), an on-demand enterprise software maker, could kick off its investor roadshow on Thursday, September 20.
Identity theft protection service LifeLock (LOCK), Indian rice provider Amira Nature Foods (ANFI) and auction company Taylor & Martin Group (TMG) will also reach the 21-day minimum later this week. Others that have already hit the threshold include fleet management software provider FleetMatics (FM) and weight management product marketer ViSalus (VI).
IPO market performance continues to rise; Palo Alto and Five Below fall
The 22 US IPOs from the past 90 days have gained 34% on average from their issue prices, up from 32% last week. Aftermarket returns now stand at 18% on average, up from 16% last week and far outpacing the broader equity indices. More than 85% (19 of 22) are trading above their offer prices, and more than half (12 of 22) are up more than 30%.
Two of the best performers, discount retailer Five Below (+112%; FIVE) and security appliance vendor Palo Alto Networks (+60%; PANW), reported results last Monday. Both fell off after failing to meet heightened expectations, but Five Below surged after the Fed announcement and finished up for the week. Year-to-date, US IPOs are up 23% on average with an average aftermarket return of 8%, and 65% of deals (59 of 91) are trading above their offer prices.
Pipeline Update
Two companies were added to the IPO pipeline last week. Energy & Exploration (ENXP), an oil and gas E&P, filed to raise $275 million. Silver Bay Realty Trust (SBRT.RC), a REIT focused on single-family homes, is being carved out from Two Harbors (NYSE: TWO) and filed to raise $288 million. The US IPO pipeline now holds 151 companies looking to raise over $47 billion. Of these, 67 have updated their filings within the past 90 days. Combined with the large number of rumored confidential filings and US equity markets that are now up 15-20% year-to-date, IPO investors could see a flurry of activity in the fourth quarter of 2012.
