The 2017 IPO market is off to a stellar start. Oilfield services provider Keane Group became the year's first IPO when it raised $508 million - 69% more than anticipated - and popped 14% on Friday. Rising oil prices have brought back the energy sector in full force: Last year's first energy IPO didn't arrive until September. The IPO calendar also filled up with 10 new launches, more than any week since July 2015. By the end of next week, we could already see more US IPOs than the entire first quarter of 2016, assuming the upcoming deals price.
| Keane Group Pops 14% in First IPO of 2017 | |||||
| Issuer Business |
Deal Size ($mm) |
IPO Market Cap ($mm) |
Price vs. midpoint |
Return at 1/20 |
|
| Keane Group (FRAC) |
$508 | $1,858 | +5.6%
|
+13.9% | |
| Provides hydraulic fracturing well completion services for the oil and gas industry. |
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FRAC and a SPAC
Keane Group (FRAC) raised $508 million by offering 26.8 million shares (60% more than expected) at $19, the high end of the range. Existing shareholders sold 41% of the deal, up from 8% in the original filing. Backed by Quantum Energy, Keane became the only public company entirely focused on well completion services for oil and gas E&Ps. While the industry is highly cyclical and potentially oversupplied, Keane is well-positioned in the attractive Permian Basin and has already demonstrated strong growth in the 4Q16 (+28% over 3Q16).
Fintech Acquisition II (FNTEU), a blank check company sponsored by The Bancorp (Nasdaq: TBBK)) raised $158 million in an upsized offering. Management's previous SPAC acquired payment solutions provider CardConnect (Nasdaq: CCN) for $410 million in March 2016.
10 IPOs launch
This week saw 10 companies set IPO terms, three of which plan to raise over $500 million. Including Keane, that would add up to four $500+ million IPOs pricing by month-end; only nine raised that much in all of 2016. The new calendar additions include Permian Basin-based E&P Jagged Peak Energy (JAG) and two LBOs: Onex-backed door and window manufacturer JELD-WEN Holding and KKR's global education network Laureate Education (LAUR). There were no initial filings this past week, and only 3 companies have filed this month, down from 16 (mostly biotechs) by this point last year. However, this is likely due to timing as companies submit year-end financials, and we expect new filings to pick up heading into February.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is up 4.9% year-to-date, while the S&P 500 is up 1.5%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include First Data (FDC) and TransUnion (TRU). The Renaissance International IPO Index is up 1.7% year-to-date, while the ACWX is up 2.9%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Aena and ABN Amro.
