Five companies raised $1.8 billion in a busy start to the 2013 U.S. IPO market last week. After a run of success for MLP IPOs in 2012, three LPs saw weak trading, partly due to relatively full valuations and perhaps also because of investor fatigue. Two other companies, Norwegian Cruise Line (NCLH) and data center REIT CyrusOne (CONE), priced above the range and traded well. Three of the companies had market caps of more than $1 billion. Four companies set terms last week, including Pfizer's (PFE) animal health unit Zoetis (ZOET) for a $2 billion deal. If all seven deals scheduled for the rest of the month price, it would be the busiest January for U.S. IPOs since 2006.
All Three MLP Deals Trade Down
In the first IPO of 2013, USA Compression Partners (USAC), which provides natural gas compression services, raised $198 million. After falling 2% on its first day of trading, it finished the week down 3%. The largest deal of the week was a $600 million IPO from CVR Refining, LP (CVRR), which owns petroleum refineries in Kansas and Oklahoma. The company, a carveout of CVR Energy (CVR), traded up slightly on its first day, but closed Friday down 1%. The worst performer was SunCoke Energy Partners (SXCP), which produces metallurgical coke used in steelmaking. A carveout of 2011 IPO SunCoke (SXC), it raised $257 million and ended the week down 4% from its offer price.
Norwegian Cruise Line Gains 30%
The top performer of the week was Norwegian Cruise Line, the third largest cruise line operator in North America after Royal Caribbean (RCL) and Carnival (CCL). Both it and data center REIT CyrusOne priced one dollar above the range. Norwegian raised $447 million and gained 30%, while CyrusOne raised $314 and traded up 12%. CyrusOne was carved out of telecom Cincinnati Bell (CBB), which continues to own 80% of the company.
Four Deals Set Terms
The first billion dollar deal of the year -- and one of the most anticipated from the current IPO pipeline -- launched on Thursday. Pfizer is spinning off its animal health unit, Zoetis, in a $2 billion IPO. Bain-backed Bright Horizons Family Solutions (BFAM), the leading provider of employer-sponsored child care, plans to return to the public markets with a $202 million deal. Californian homebuilder TRI Pointe Homes (TPH) is looking to take advantage of a hot housing sector with a $176 million deal. Finally, KaloBios (KBIO), a biotech focused on treating respiratory diseases and cancer, set terms for a $50 million deal.
Israeli Biotech Files for Small Deal
Alcobra (ADHD), a biotech developing a treatment for ADHD, made the only initial filing of the week. The Israeli company, which has not generated any revenue, filed to raise just $17 million, implying a post-IPO valuation deep in micro-cap territory. There are now 118 companies in the U.S. IPO pipeline, including 50 that have released updates in the past 90 days, looking to raise a total of $33.4 billion.
U.S. IPO Market Performance
The mixed trading last week pulled down recent performance metrics. The average total return for IPOs from the past 90 days is 25% (vs. 30% as of a week ago), and the average aftermarket return is 14% (vs. 17%).