The 2015 IPO market kicks off with three finance companies including a mortgage REIT, an insurance service company and a Wisconsin dairy-focused bank. Financial offerings averaged three per month in 2014 and averaged 2% on the first day and 0.4% thereon. Insiders plan to float a portion of each deal on this week's IPO calendar.
Sutherland Asset Management (SLD) previously filed to raise $250 million in July 2009 but postponed its offering. In 2009, Sutherland invested in highly-rated non-Agency securities. Now the company, which is managed by Waterfall Asset Management, focuses on small balance commercial loans used by small businesses, including acquired sub-performing and non-performing loans. No mortgage REITs went public in 2014, and the eleven that IPO'd between 2011 and 2013 each trade below the offer price.
Patriot National (PN) previously filed to raise $170 million at a $258 million market cap in February 2010 but postponed and later withdrew. In 2010, the company provided insurance services and wrote insurance policies for workers' compensation. The IPO candidate has since shed its insurance underwriting business, and now focuses only on higher-margin brokerage and administration services.
County Bancorp (ICBK) is set to raise $20 million with a diluted market cap of $94 million - a lower valuation than any bank IPO in 2014. County has over $700 million in assets and booked $30 million in net interest and noninterest income during the 12 months ended September 30, 2014. Midwest agribusiness bank Great Western Bancorp (GWB) had the second highest return among regional banks in 2014. Anchor BanCorp Wisconsin (ABCW), the only Wisconsin-based bank in 2014, had the best first day pop (+17%) and total return (34%) of the group.
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IPO Pipeline update
Data management platform provider Box (BOX) and osteoporosis biotech Zosano (ZSAN) joined the IPO calendar. Five more companies submitted initial filings last week - two regional banks in the Southeast, one mortgage REIT, a genetic testing company and a wind turbine designer-manufacturer. Late December saw a rush of initial filings, most of which were health care companies. Notable names included Shake Shack (SHAK), Spark Therapeutics (ONCE) and Inovalon (INOV).
No technology IPO has initially filed in over 60 days, when December IPOs Hortonworks (HDP; +69%) and New Relic (NEWR; +47%) joined the pipeline. However, their success, Box's upcoming IPO will provide another chance to gauge investor sentiment in the tech sector.
IPO Index trending up
The Renaissance US IPO Index, a market cap weighted basket of newly public companies designed to represent the US IPO market, gained 7.7% in 2014 and is up 5.4% in the past 90 days. Renaissance Capital's IPO ETF tracks the index, and its top holdings include Zoetis (ZTS), Alibaba (BABA), Twitter (TWTR), Ally Financial (ALLY) and Hilton (HLT).
