Headlined by security giant ADT's $2 billion offering, the third week of 2018 could see over $2.5 billion in IPO proceeds. For the second week in a row, we'll have an energy services provider and a REIT, with cold-storage REIT Americold Realty (COLD) and SCF-backed Nine Energy Service (NINE) both set to IPO.
Recent filing activity has been strong, and a number of IPOs look ready to launch. The end of January could see a wave of biotech IPOs and ARMO Biosciences (ARMO), resTORbio (TORC) and Solid Biosciences (SLDB) are able to join the IPO calendar early next week. News also broke this week that Argentine airport operator Corporación América Airports (CAAP) plans to IPO by the end of the month. It could be joined by Argentine power producer Central Puerto (CEPU), also able to launch next week.
| U.S. IPO Calendar | |||
|---|---|---|---|
| Issuer Business |
Deal Size Market Cap |
Price Range Shares Filed |
Top Bookrunners |
| ADT (ADT) Boca Raton, FL |
$2,000M $14,017M |
$17 - $19 111,111,112 |
Morgan Stanley Goldman |
| Apollo-backed provider of monitored security services for homes and businesses. | |||
| Americold Realty (COLD) Atlanta, GA |
$360M $2,049M |
$14 - $16 24,000,000 |
BofA ML JP Morgan |
| World's largest cold-storage REIT backed by The Yucaipa Companies. | |||
| Nine Energy Service (NINE) Houston, TX |
$151M $501M |
$20 - $23 7,000,000 |
JP Morgan Goldman |
| SCF-backed provider of well completion and production services. | |||
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Security firm ADT (ADT) is aiming to raise $2 billion, the first of what could be a big year for billion-dollar IPOs. Bought by Apollo in 2016 for $12 billion and merged with Protection One and ASG (acquired in 2015 for $2 billion), ADT is now coming to market at a $23 billion enterprise value. The company benefits from its leading position in the residential market, strong brand and high recurring revenue. Since Apollo took over in 2016, ADT has reduced customer attrition and increased margins. However, we note that ADT's 3% annual growth is below-market and that it will be highly leveraged post-IPO.
Americold Realty Trust (COLD) is targeting $360 million at a $2 billion market value. The company will be the only publicly-traded cold-storage REIT, operating in a fragmented industry with high barriers to entry. However, cash flow is dragged down by high maintenance capex and a highly levered balance sheet post-IPO ($1.6 billion in debt; 5.6x LTM EBITDA). Americold previously filed to raise $645 million in 2010, but withdrew its offering as US markets sold off amid the European debt crisis.
Nine Energy Service (NINE) aims to raise $151 million at a $501 million valuation. Formed by SCF Partners through a series of acquisitions, the well completion and productions services company has a broad geographic footprint and expects to benefit from the industry trend toward more complex wells. Recent energy IPOs have been trading higher, including Liberty Oilfield Services (LBRT), which popped 28% in its January 12 debut. However, we note that Nine Energy operates in a cyclical industry with large incumbents and has experienced high management turnover.
Regulation A+ IPO Muscle Maker (MMB) could also raise $20 million and begin trading this week.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is up 1.7% year-to-date and the S&P 500 is up 4.2%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Snap (SNAP) and Invitation Homes (INVH). The Renaissance International IPO Index is up 4.9% year-to-date, while the ACWX is up 4.5%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Orsted (DONG Energy) and ASR Nederland.
