The third tech IPO of 2015 crumbled last week, and now all eyes are on construction supply company Summit Materials, the week's only IPO and the year's first LBO.
• 1 US IPO on the calendar: Blackstone's Summit set to raise $400 million
• 2015 IPO activity should still pick up due to ripe market conditions
• Potential IPO launches include GoDaddy, Black Knight and Virtu
Get SUM: Blackstone's "aggregates aggregator"
Formed in 2009 by Blackstone (NYSE: BX), Summit Materials (SUM) has consolidated more than 30 companies to become a top US aggregates and concrete supplier for residential, commercial and public construction. The IPO candidate is highly levered, with post-IPO debt of 4.8x LTM EBITDA, but founder and CEO Thomas Hill previously executed a similar acquisition strategy at the North American arm of international construction supply company CRH (NYSE: CRH). The company booked $1.2 billion in sales last year (13% EBITDA margin) and stands to continue benefiting from the rebounding US construction market. In addition, key peers (MLM, VMC) have performed well recently and the last LBO'd construction supply company to go public, Advanced Drainage Systems (WMS), has traded up 74% since its July 2014 IPO.
| Renaissance Capital's IPO Calendar - Week of March 9, 2015 | ||||
| Issuer Business |
Symbol Exchange |
Deal Size $mil |
Price Range Shares Filed |
Top 2 bookrunners |
| Summit Materials Denver, CO |
SUM NASDAQ |
$400 | $17 - 19 22,222,222 |
Citi Goldman Sachs |
| Blackstone-backed provider of aggregates, concrete and asphalt paving services. | ||||
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IPO pipeline update: All quiet on the IPO front
The US IPO market remains eerily quiet, and we reiterate that a relatively high number of deals could schedule pricings in the final two weeks of March, before a pause during Easter week. US equity markets are flying high, average 2015 IPO returns are at their highest level and the VIX volatility index is comfortably below 20. Yet there have been exactly half as many initial filings this year and 35% fewer IPOs.
The full IPO pipeline contains 117 companies looking to raise $21 billion, 37 of which that have amended or filed in the past 30 days. The largest and most notable IPO-ready companies remain GoDaddy (GDDY; $750 million estimated deal size), Black Knight Financial Services (BKFS; $400mm) and Virtu Financial (VIRT; $500mm). Others continue to update 2014 financials, including security software maker Good Technology (GDTC) and fabless chip designer eASIC (EASI). Insulin pump maker Valeritas (VLRX) must price its $90 million IPO before March 31 or face unfavorable consequences under debt covenants. Three growth IPOs become eligible to launch this week (RKDA, SEDG, CLLS), with preclinical gene-editing biotech Cellectis targeting the hottest space.
Last week, Etsy (ETSY) filed for an IPO that could raise $300 million, which would make it the largest New York tech IPO in over 15 years. Two more genetic testing companies (OPGN, RAIN) recently joined HTG Molecular (HTGM) in the IPO pipeline, along with the two postponed deals from February (IDGX, AGMX).
IPO market snapshot
The Renaissance IPO Index, a market cap weighted basket of newly public companies that is designed to represent the US IPO market, has traded up nearly 6% year-to-date, close to its all-time high. The IPO market remains open to new issuance. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Twitter (TWTR), Zoetis (ZTS), Alibaba (BABA), Hilton (HLT) and Ally Financial (ALLY). To find more about purchasing shares of the ETF from your broker, visit our IPO investing page.
