Amid an improving market backdrop, four deals are on the calendar to raise nearly $1.5 billion. The group represents a diverse range of established, growing businesses, which will be closely watched by the high number of companies in the IPO pipeline.
Bats Global Markets (BATS) – Set to price this week, this profitable exchange operator ($104mm in adj, earnings) should break the IPO freeze. Insiders are selling the entire $202 million offering, which is 11.5% of the market cap. Thanks to lower pricing, Bats now rivals the NYSE and Nasdaq by trading volume. Its valuation puts it at a modest discount on earnings.
MGM Growth Properties (MGP) – Spun out of MGM Resorts, this Las Vegas REIT will come to market with a portfolio of 10 entertainment properties under 10-year (plus renewals) triple-net leases with annual rent of $550 million (+2% annual escalators). It plans an initial annualized dividend of $1.43 per share, yielding 7.3% at the midpoint.
American Renal Associates (ARA) – This dialysis clinic operator this could be the first LBO to go public since First Data (FDC; -22%) in mid-October. Advanced Disposal (ADSW) postponed earlier this year, while other LBOs have delayed launching. In 2015, American Renal grew revenue by 17% to $658 million, and generated $114 million in adj. EBITDA net of non-controlling interest. It expects to have about $500 million in post-IPO debt.
SecureWorks (SCWX) – The spinoff of Dell aims to be the first tech IPO of 2016. While still unprofitable, it grew revenue 30% to $340 million in fiscal 2016 (+32% MRQ). Its 52% gross margin is below cybersecurity peers, but boasts a revenue retention rate of 102% and its average 2-year contracts provide revenue visibility. SecureWorks is floating just 10.6% of its shares, below the 15-20+% norm.
