U.S. IPO Recap: 7 Deals Price, 5 Set Terms As Busy July Continues

by: Renaissance Capital IPO Research

Last week was a busy week for U.S. IPOs, with seven deals pricing and five more setting terms. OncoMed (NASDAQ:OMED) delivered last week's best performing deal, gaining 60% on its first day of trading, the best first-day return for a biotech since July 2000. Activity is poised to continue through at least the end of July, with five new deals setting terms last week and eleven U.S. IPOs scheduled to price this week. In addition, three companies from our Private Company Watchlist submitted initial filings, including Blackstone's Brixmor, a shopping center REIT that we estimate could raise upwards of $700 million.

IPO pricings (week of July 15, 2013)
Company (Ticker) Business Deal Size ($mm) Price vs. Midpoint Return
NRG Yield (NYSE:NYLD) Energy infrastructure assets $431 10% 27%
Rexford Industrial Realty (NYSE:REXR) Industrial properties REIT $224 0% 0%
Diamond Resorts Int'l (NYSE:DRII) Timeshare company $217 -18% 15%
RetailMeNot (NASDAQ:SALE) Digital coupon marketplace $191 0% 32%
Physicians Realty Trust (NYSE:DOC) Health care properties REIT $120 -8% 0%
UCP (NYSE:UCP) California homebuilder $116 -6% -5%
OncoMed Pharma Cancer biotech $82 13% 57%

OncoMed soars, lackluster performance for real estate plays

Biotech fever continued last week, with OncoMed Pharmaceuticals pricing above its range and gaining 60% in its first day of trading. It replaced bluebird bio’s (NASDAQ:BLUE) 58% first-day pop in June 2013 as the best biotech first-day return since Pain Therapeutics (NASDAQ:PTIE) rose 82% in its July 2000 debut. NRG Yield, a company formed by NRG Energy to own conventional, renewable and thermal power generation assets, also priced above its range and produced attractive returns (24% first-day pop; 27% total return), as investors responded favorably to its 5.5% yield. RetailMeNot, which operates the largest digital coupon sites in the US and the U.K., was another top performer last week; the deal priced at the midpoint of its range and traded up 32% in its market debut on Friday.

Three companies, Diamond Resorts International, Physicians Realty Trust and UCP, priced at or below the low end of their IPO ranges. Diamond Resorts International, a timeshare company with more than 490,000 members and 296 destinations, gained 15% on its first day, but is still not trading within its initially proposed range. Last week’s REIT deals, industrial properties-focused Rexford Industrial Realty and health care properties owner Physicians Realty Trust, had flat first-day showings, while UCP, a homebuilder and land developer in California and Washington, traded down almost 7% in its market debut amid continued concerns over rising interest rates.

IPOs setting terms (week of July 15, 2013)
Company (Ticker) Business Deal Size ($mm) LTM Sales ($mm)
American Homes 4 Rent (NYSE:AMH) Residential REIT $750 $11
Phillips 66 Partners LP (NYSE:PSXP) Pipeline and logistics assets $300 $118
WCI Communities (NYSE:WCIC) Luxury homebuilder $185 $262
Marlin Midstream Partners LP (FISH) Midstream natural gas assets $125 $48
Iroko Pharmaceuticals (IRKO) NSAID drug company $101 $10

Busy July continues as five companies launch deals

American Homes 4 Rent, a single-family residential REIT looking to raise $750 million, was the largest deal to launch last week. American Homes 4 Rent is the third single-family residential REIT to set terms this year, following deals from American Residential Properties (NYSE:ARPI), which raised $288 million in May but is down 9% since its debut, and Colony American Homes (NYSE:CAHS), which launched a $245 million deal at the end of May but postponed it in June. WCI Communities, which develops luxury residential communities in coastal Florida and is the second homebuilder to launch in July, hopes to raise $185 million in the wake of fellow homebuilder UCP’s lukewarm reception last week.

Two of the five deals that launched last week came from midstream energy companies Phillips 66 Partners, which owns and operates pipeline and logistics assets of parent Phillips 66, and Marlin Midstream Partners, a midstream natural gas assets company.

New IPO filers (week of July 15, 2013)
Company (Ticker) Business Deal Size ($mm) LTM Sales ($mm)
Brixmor Property Group (NYSE:BRX) Shopping center REIT $700* $1,136
Third Point Reinsurance (NYSE:TPRE) Property and casualty reinsurer $250 $299
Associated Materials (SIDE.RC) Exterior building products $100 $1,139
*Renaissance Capital estimate.

Three new filers added to the pipeline

Three members of our Private Company Watchlist submitted initial filings last week. Brixmor Property Group is the second largest owner of U.S. community and neighborhood shopping centers and is backed by Blackstone. It filed with a $100 million placeholder, but we estimate that the actual deal size could be upwards of $700 million. Associated Materials, which is also PE-backed (Harvest Partners), submitted a filing for a $100 million IPO. The company is a close peer of Ply Gem (NYSE:PGEM), which priced its deal in May and has traded down 8% since. Third Point Reinsurance, which is the reinsurance arm of Dan Loeb's hedge fund Third Point, is looking to raise $250 million in the first insurance IPO of 2013.

IPO market snapshot

The 99 IPOs in 2013 have raised $22.0 billion and produced an average return of 30%. There have been 55 IPOs in the past 90 days, with total proceeds of $10.9 billion and an average return of 30%. The active IPO pipeline includes 116 companies looking to raise $33.0 billion.

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