Four companies went public and traded up this past week, raising a combined $733 million. Tech IPO Everbridge led the group, trading up 27% on its debut. An MLP carved out of Noble Energy made headlines as the first energy IPO in over a year, and its 17% gain should encourage more filings. A small Tennessee bank and a large Bermuda bank rounded out the four.
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| IPO Pricings Week of September 12th, 2016 | |||||
| Issuer Business |
Deal Size ($mm) |
Market Cap at IPO ($mm) |
Price vs. midpoint |
First-day return |
Return at 9/16 |
| Everbridge (EVBG) | $90 | $329 | 0% | +27% | +27% |
| Provides mass messaging and critical communications services to enterprises. |
|||||
| Noble Midstream Partners (NBLX) | $281 | $716 | +13% | +16% | +17% |
| MLP formed by Noble to own oil and gas gathering assets in Colorado's DJ basin. |
|||||
| FB Financial (FBK) | $112 | $471 | +12% | +9% | +9% |
| Tennessee bank with 45 branches and $2.9 billion in assets. |
|||||
| The Bank of N.T. Butterfield (NTB) | $250 | $1,282 | 0% | +5% | +5% |
| Bank and wealth manager operating in Bermuda and the Cayman Islands. |
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Everbridge (EVBG) priced its $90 million IPO at the midpoint and quickly dipped below the offer price on Friday, before trading up 27% by end-of-day. The provider of mass notification software grew 30% in the first half of 2016, reaching $36 million in sales at an almost breakeven EBITDA margin. While it still relies heavily on one service, its experienced management team has built a model around multi-year contracts and made traction on new product offerings. Everbridge's initial success is also attributable to its pricing at a discount to publicly-traded peers.
Once notably absent from the IPO market, the tech sector now represents 28% of offerings in the past 90 days. The 10 tech IPOs from 2016 average a 103% return, a positive sign ahead of the three high-growth, founder-led software companies on the IPO calendar for next week. In addition, two "unicorns" may be on the way: Coupa Software (COUP) is soon eligible to launch an October IPO, while Nutanix (NTNX) showed off a strong quarter this past week.
Noble Midstream Partners LP (NBLX) priced above the range and a day early, raising $281 million in the first energy IPO in over a year. Based on its reception (+17%) and recent filings, it likely won't be the last. Carved out of Noble Energy (NYSE: NBL), the growth MLP operates pipelines in Colorado's Denver-Julesburg Basin, and came public with a 6.7% yield.
FB Financial (FBK) also priced above the range, raising $112 million and finishing up 9%. The small-cap Tennessee bank benefits from growing regional populations and strong trading from other banks headquartered in the Volunteer State: Last year's Franklin Financial (FSFB) is up 76% from its IPO price. A smaller TN-based bank, CapStar (CSTR), is scheduled to price its IPO in the week ahead.
The Bank of N.T. Butterfield & Son (NTB) raised $250 million, as expected, and traded up 5%. The Bermuda bank boasts extremely low deposit costs and its return on tangible equity has improved markedly in the past two years (18% in 2015). A dominant player in its locations, Butterfield is also exposed to local island economies, and each of the bank's various business lines would be impacted if global economies pass legislation targeting tax havens. It offered a 5.4% annualized yield at the IPO price.
In addition to the four operating companies that went public, two blank check companies focused on the media and entertainment sector began trading this week. Saban Capital Acquisition (SCACU), backed by billionaire media mogul Haim Saban, raised $235 million in an upsized offering. M I Acquisitions (MCACU), backed by 28-year-old media hustler Joshua Sason, completed a $50 million IPO.
Pipeline Update
In addition to the year's first energy IPO, the past week also saw the first initial filings from energy E&Ps. Fast-growing Extraction Oil & Gas (XOG), based in the Denver-Julesburg Basin, could raise as much as $400 million, while we estimate that Vantage Energy (VEI), based in the Marcellus and Barnett Shales, could raise $600 million. Updated filings were submitted by PE-backed companies McGraw Hill Education (MHED), AquaVenture (WAAS), JELD-WEN (JELD) and Camping World (CWH)
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is flat year-to-date, while the S&P 500 is up 5%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Alibaba (BABA), Synchrony Financial (SYF) and Citizens Financial Group (CFG). The Renaissance International IPO Index is down 2% year-to-date, compared to +4% for ACWX. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include NN Group and Aena S.A. To find out if this is the best ETF for you, visit our IPO Investing page.
