US IPO Recap: Quiet week for pricings, but active IPO pipeline foreshadows busy July and August

The US IPO market slowed last week in the wake of June’s volatility and in anticipation of the Fourth of July holiday, with no deals pricing and only one deal setting terms. However, there are currently 118 deals in the pipeline, 21 of which submitted new or updated filings in the last 7 days. This heightened activity in the pipeline suggests that many deals could be ready to launch in the next few weeks. Seven companies submitted initial filings, including YuMe (YUME), an ad tech company, and Banco Santander’s US auto loans unit (SCUSA.RC), both members of our Private Company Watchlist.

Physicians Realty Trust sets terms for $100 million IPO
Physicians Realty Trust (DOC), a recently organized REIT focused on acquiring, developing and managing healthcare properties, announced its plans to offer 8 million shares at a price range of $11.50 to $13.50. At the midpoint of the proposed range, the company would raise $100 million and command a market value of $137 million. The REIT was organized by B.C. Ziegler & Company, and its initial portfolio, contributed by former Ziegler funds, will consist of 19 medical office buildings in ten different states. Although the deal has set terms, the pricing date is still to be determined.

IPO pipeline remains active
Although last week was a quiet week for pricings, the IPO pipeline has remained active, as seven companies submitted initial filings and fourteen more companies updated their filings in the last seven days. The largest initial filings came from MiX Telematics (MIXT), a South African-based SaaS solutions provider with a proposed deal size of $125 million, and Ellington Housing (EH.RC), which owns single- and multi-family residential properties and is looking to raise up to $100 million. Ellington Housing is externally managed by Ellington Financial (NYSE: EFC), which also manages Ellington Residential Mortgage REIT (EARN), a mortgage REIT that has fallen 16% since its initial public offering on May 1, 2013.

Two companies from our Private Company Watchlist, YuMe, an ad tech company, and Santander Consumer USA Holdings, the US auto loan division of Santander, also submitted initial filings last week. YuMe's filing follows the recent IPOs of ad tech companies Tremor Video (TRMR), Marin Software (MRIN) and Millennial Media (MM), which have traded down by 27% on average since their IPOs. Santander Consumer USA Holdings is Santander's second major spin-off in the last twelve months. The Spain-based banking group spun off its Mexican banking business unit (BSMX) in a $2.9 billion US IPO in September 2012. Other notable filers from last week include Control4 (CTRL), a provider of in-home automation and control solutions, and Marrone Bio Innovations (MBII), a producer of environmentally-friendly pesticide and plant health products.

As the IPO market opens for the summer, several companies that recently updated filings could launch deals soon. After a hot second quarter for biotech IPOs (16 deals; 36% average return), five more, including GSK and Bayer-partnered OncoMed (OMED), have filed within the last two weeks. Sprouts (SFM), which first filed on May 9, updated its filing on Wednesday and could look to match the success of fellow grocery store operator Fairway (FWM, +86%). And with energy IPOs largely absent in the first half of the year (5 vs. 53 in 2011-2012), the sector could rebound with deals from Frank’s (FI, $500 million deal size), QEP (QEPM, $400 million) and four other recent filers.

IPO market snapshot
The 92 IPOs in 2013 have raised $20.6 billion and produced an average return of 24%. There have been 60 IPOs in the past 90 days, with total proceeds of $12.9 billion and an average return of 25%. The active IPO pipeline includes 118 companies looking to raise $33.2 billion.