Nine IPOs raised $5.8 billion during the week of September 22, the IPO market's third-highest capital raise of the year behind a surge in late-July and the week of September 15, where Alibaba (BABA) raised $21.8 billion. The week of September 22 saw the year's 200th IPO price and featured a diverse group of industries, including technology, energy, retail, banking, biotech and asset management. The week's two winners, CyberArk Software (CYBR) and CONE Midstream Partners LP, could signal a rise in technology IPOs and MLPs in the fourth quarter. RBS spinoff Citizens Financial (CFG), which raised $3 billion to be the year's second largest IPO, was one of several deals that received a lukewarm reception.
CyberArk Software spikes 87%
Israel-based CyberArk Software raised $86 million when it priced above the range and traded up 87% on Wednesday. The stock continued its ascent on Thursday but reversed course on Friday. The third quarter has seen a historically low percent of technology IPOs, but CyberArk's strong demand along with the previous tech IPO, Mobileye (MBLY), could open the gates for new launches. Tech IPOs on the calendar include Yodlee (YDLE), HubSpot (HUBS) and MOL Global (MOLG).
Only six IPOs have had a higher first-day pop, including three technology offerings: Castlight Health (CSLT, 149% first-day pop; currently -19% from IPO price), Varonis Systems (VRNS, 100%; 1%) and Coupons.com (COUP, 88%; -24%). While the three have traded off materially in the aftermarket, each went public ahead of the sharp contraction for momentum tech and cloud software multiples that took place in March through May.
CONE Midstream MLP demonstrates demand for yield
CONE Midstream Partners LP (CNNX), a joint venture between CONSOL Energy (CNX) and Noble Energy (NBL) owning pipelines in the Marcellus Shale, raised $385 million after pricing above the range. CONE Midstream popped 38% on its first day, signaling strong demand for yield plays with transparent cash flow and attractive growth potential. CONE was one of several oil and gas MLPs in the IPO pipeline, and its positive trading could encourage others to launch, including four more MLPs that submitted initial filings during the week.
Year's largest bank IPO Citizens trades up
Citizens Financial (CFG) priced below its range to raise $3 billion and represents the second-largest IPO of 2014, behind Alibaba. It is the ninth $1+ billion IPO of the year and the fourth financial IPO of the group after Santander Consumer USA (SC), Ally Financial (ALLY) and Synchrony Financial (SYF), none of which have traded particularly well. Despite valuation pushback, Citizens' offering is a positive sign for banking IPOs, which have seen lackluster gains so far, and may encourage more financial spinoffs as major banks continue to shed non-core assets.
Two private equity see modest gains
Backed by May IPO Ares Management LP (ARES), Smart & Final Stores (SFS) priced at the low end of the range to raise $161 million. The warehouse-style grocery chain with 250 stores traded flat on its first day but gained 14% by week-end. Smart & Final boasts strong comp growth and the potential for national expansion, though it must convince investors its model can grow beyond California (>90% of sales).
Travelport Worldwide (TVPT) raised $480 million after pricing above the range. The stock traded up 3% on its first day and fell to just under 2% by Friday. Backed by Blackstone and former debt holders, Travelport operates the third-largest reservation and inventory management system for the airline industry, behind Amadeus and April IPO Sabre (SABR). While the company's market share has slipped in recent years, it could see interest because of its nascent high-growth payment system and long-standing relationship with Delta Airlines.
Two major US listings from foreign issuers
Grupo Aval (AVAL), Colombia's largest bank with $86 billion in assets, raised $1.1 billion by offering ADSs tied to preferred shares that are currently listed on the Colombia Stock Exchange. Israel Chemicals (ICL), a spinoff of Israel Corporation that produces potash and fertilizer, raised $421 million in its US offering of ordinary shares listed on the Tel Aviv Stock Exchange. Both companies saw their listed stock fall prior to the US IPO and trade up slightly by week-end.
One Acquired, One Postponed
On the morning of its proposed pricing date, Civitas Therapeutics (CVTS) announced its plans to be acquired by Acorda Therapeutics for $525 million, a 30% premium to the proposed IPO market cap. Civitas, which is developing an inhaled formulation of an existing drug for Parkinson's Disease, had positive Phase 2 results and a proprietary delivery technology.
Vantage Energy (VEI) had originally set terms to price on Wednesday but postponed its $600 million IPO, citing market conditions. Marcellus Shale E&P Eclipse Resources (ECR) has traded off since its June 2014 IPO.
Two more IPOs, Viking Therapeutics (VKTX) and rEVO Biologics (RBIO), are determining their pricing on a day-to-day basis.
| IPO pricings (week of September 22, 2014) | |||||
| Company (Ticker) | Business | Deal Size ($mm) | IPO Price vs. Midpoint | First day pop | Return at 9/26 |
| CyberArk Software (CYBR) | Security enterprise software |
$86 | 14% | 87% | 86% |
| CONE Midstream Partners LP (CNNX) | MLP with pipelines in the Marcellus | $385 | 10% | 38% | 34% |
| Smart & Final Stores (SFS) |
Ares-backed western US grocer |
$161 | -8% | 0% | 14% |
| Citizens Financial (CFG) | RBS bank spinoff; 13th largest US bank | $3,010 | -10% | 7% | 8% |
| Israel Chemicals (ICL)* |
Israeli fertilizer producer |
$421 |
-6% | 2% | 3% |
| Grupo Aval (AVAL)** |
Colombia's largest bank |
$1,100 |
-10% |
1% | 2% |
| Travelport Worldwide (TVPT) | 3rd largest GDS for travel industry | $480 | 7% | 3% | 2% |
| Vitae Pharmaceuticals (VTAE) | Biotech: Diabetes and Alzheimer's |
$55 | -33% | -5% | -1% |
| Medley Management (MDLY) | Asset manager with $3.3B AUM |
$108 | -14% | -9% | -7% |
**US offering of ADSs representing preferred shares listed on the Colombia Stock Exchange
IPO market snapshot
So far this year, 204 IPOs have raised $68.2 billion and produced an average first day return of 14%. The Renaissance IPO ETF (symbol: IPO), a float cap-weighted basket of newly public companies and indicator of post-IPO performance, has gained/fallen 5.1% compared with 7.3% for the S&P 500. Over the last 30 days, the IPO ETF has fallen 1.4% compared with -0.9% for the S&P 500; the IPO market dipped amid a selloff in broader indices. The active IPO pipeline includes 138 companies looking to raise a total of $29.7 billion.
