The IPO market continues its record-breaking start of the year with nine deals aiming to raise $3.5 billion. Casino REIT Vici Properties headlines the week with a $1 billion IPO. And the big deals keep coming: Three more target over $500 million, including well-known airport retailer Hudson and two Argentina plays on airports and power. In addition to large offerings, some emerging themes of the 2018 US IPO market include REITs, biotechs, energy and South America, all of which we'll see represented this week.
Another burst of IPOs can join the calendar
In addition to the nine on the calendar, seven companies become eligible to launch their IPOs on Monday. That group includes industrial pipe manufacturer IPSCO Tubulars (IPSC), Chinese fitness device maker Huami (HMI), marketing data provider Cardlytics (CDLX), frac sand supplier Vista Proppants (VPRL) and frac equipment supplier Cactus (WHD). Three others also appear poised to join the calendar: Botox biosimilar developer Evolus (EOLS), asset manager Victory Capital (VCTR) and Quintana Energy Services (QES).
| U.S. IPO Calendar | |||
|---|---|---|---|
| Issuer Business |
Deal Size Market Cap |
Price Range Shares Filed |
Top Bookrunners |
| America Airports (CAAP) Buenos Aires, Argentina |
$600M $3,360M |
$19 - $23 28,571,428 |
Oppenheimer BofA ML |
| Operates 52 airports worldwide including 37 in Argentina. | |||
| Hudson (HUD) Middlesex, United Kingdom |
$788M $1,850M |
$19 - $21 39,417,764 |
Credit Suisse Morgan Stanley |
| Operates airport concessions and duty-free stores across North America. | |||
| Sol-Gel Technologies (SLGL) Ness Ziona, Israel |
$60M $209M |
$11 - $13 5,000,000 |
Jefferies BMO |
| Developing topical acne creams that deliver treatment via microcapsules. | |||
| VICI Properties (VICI) Las Vegas, NV |
$1,000M $7,006M |
$19 - $21 50,000,000 |
Morgan Stanley Goldman |
| Newly-formed REIT that manages properties on behalf of Caesars Entertainment | |||
| Central Puerto (CEPU) Buenos Aires, Argentina |
$692M $2,952M |
$17.50 - $21.50 35,486,580 |
BofA ML JP Morgan |
| Leading private sector power producer in Argentina. | |||
| FTS International (FTSI) Fort Worth, TX |
$250M $1,756M |
$15 - $18 15,151,516 |
Credit Suisse Morgan Stanley |
| Provides hydraulic fracturing services for the oil and gas industry. | |||
| Adial Pharmaceuticals (ADIL) Charlottesville, VA |
$14M $57M |
$9 - $11 1,400,000 |
Joseph Gunnar |
| Developing a targeted therapy for alcohol use disorder based on an approved drug. | |||
| MTech Acquisition (MTECU) Orlando, FL |
$50M $65M |
$10 5,000,000 |
EarlyBird |
| Blank check company formed to acquire a cannabis services business. | |||
| One Stop Systems (OSS) Escondido, CA |
$20M $95M |
$6 - $8 2,875,000 |
Roth Cap. |
| Manufactures computing systems for high speed processing. | |||
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Render unto Caesars: Vici Properties targets $1 billion
Spun out of Caesars Entertainment, Vici Properties (VICI) owns marquee casinos like the iconic Caesars Palace and Harrah's Las Vegas. With a proposed 5.25% yield, the REIT benefits from long-term leases, rent escalators and a pipeline of Caesars properties. However, Vici is highly exposed to the Las Vegas gaming market, and more specifically its (recently-bankrupt) former parent. Vici recently rejected a buyout offer from close peer and April 2016 IPO MGM Growth Properties (MGP) at $19.50 per share (below its $20 midpoint).
Big news for Hudson News: A $788 million IPO
Hudson (HUD) plans to raise $788 million for public parent Dufry. The well-known brand operates almost 1,000 stores across North American airports and travel spots. It has achieved a track record of solid growth and 10% EBITDA margins in a large market. Investors may take issue with its many related-party transactions, while several key concession contracts make up a significant portion of sales.
Two IPOs, airports and power, offer a play on Argentina's recovery
Corporación América Airports' (CAAP) $600 million IPO offers exposure to Argentina and several other South American countries with diverse portfolio of airports. It boasts long-term concession contracts, and enjoyed mid-teens revenue growth in the 9mo17. Contracting margins, high-capex needs and related-party transactions with the selling shareholder are key risks.
Central Puerto (CEPU) targets $692 million for selling shareholders. Argentina's largest private sector power producer, Central Puerto has strong cash flow and a clean balance sheet. However, it is exposed to FX changes and inflation, which resulted in its operating margin dropping roughly 10 points in 2017.
Also look out for Argentine agrochemicals producer Bioceres (BIOX), on the IPO calendar for the following week.
IPO market pumps out another fracker with FTS International
FTS International (FTSI), one of the largest fracking companies in North America, is raising $250 million to pay down its heavy debt levels. After staggering losses in 2015-2016, FTS recently showed its potential to deliver massive cash flows, as long as oil prices remain stable. Investors appear bullish, with close peer Liberty Oilfield Services (LBRT) up 34% from its IPO earlier this month.
Will this acne biotech pop?
Backed by Israeli billionaire Moshe Arkin, Sol-Gel Technologies (SLGL) is raising $60 million ahead of Phase 3 trials for a once-daily acne cream. Its lead candidate utilizes microcapsules to deliver active ingredients that are based on an approved drug. Arkin plans to buy up to $25 million of the deal (42%).
3 small-caps: Luxury theaters, a marijuana SPAC and a computing supplier
iPic Entertainment (IPIC) is raising $40 million in a Reg A+ "best efforts" IPO. Combining luxury theaters, full-service bars and polished-casual restaurants, iPic grew sales by 25% in the 1H17. However, the company's trailing EBITDA margin of just 0.8% and post-IPO net debt of $115 million pose key risks.
MTech Acquisition (MTECU), a cannabis-focused blank check company led by former hedge fund manager Steven Van Dyke, is scheduled to raise $50 million. Last year hit a 10-year high for SPACs, but 2018 is already outpacing it, and MTech will be the year's fifth.
One Stop Systems (OSS) plans to raise $20 million. During the 9mo17, the manufacturer of high-speed computing systems grew sales by 65% to $20 million, roughly half organic, with operating income of $0.3 million (1.4% margin).
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is up 2.5% year-to-date and the S&P 500 is up 7.5%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Snap (SNAP) and US Foods (USFD). The Renaissance International IPO Index is up 7.3% year-to-date, while the ACWX is up 7.6%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Orsted (DONG Energy) and ASR Nederland.
