U.S. IPO Recap: 20 Companies File Or Set Terms For IPOs

by: Renaissance Capital IPO Research

The first full week of 2014 saw the most combined initial and terms filings since last June, while the first IPO of the year, by biotech GlycoMimetics (NASDAQ:GLYC), posted a 13% gain. Four of the seven newly scheduled IPOs were energy-related, including EP Energy's (NYSE:EPE) $1.0 billion offering. Santander Consumer USA (NYSE:SC), a loan originator and servicer, set terms for a $1.5 billion IPO, and Care.com (NYSE:CRCM), a fast-growing online marketplace for family care, launched an $80 million deal. With 91% of the last three months’ IPOs posting positive returns, 13 companies submitted initial IPO filings, tied for the most in a week over the the past year.

2013 IPO carryover GlycoMimetics raises $56 million

GlycoMimetics, a late-stage biotech developing treatments for sickle cell episodes and AML, was one of six biotechs to postpone in November 2013, when the biotech IPO boom appeared to be fading. However, last year's class of biotechs had a strong December, finishing with a 44% average IPO return. In addition, Intercept Pharmaceuticals (NASDAQ:ICPT), which completed its IPO in 2012, grabbed headlines last week with a 516% two-day gain following the early stoppage (due to positive results) of a clinical trial. Against that backdrop, GlycoMimetics set terms at a reduced valuation and raised $56 million on Thursday. Insiders, including affiliates of collaboration partner Pfizer, purchased 2 million of the 7 million shares offered.

IPO pricings (week of January 6, 2014)
Company (Ticker) Business Deal Size ($mm) IPO Price vs. Midpoint Return as of 1/10
GlycoMimetics (GLYC) Treatments for sickle cell episodes and AML $56 -47% 13%

Two billion-dollar deals added to the calendar

Seven companies (including GlycoMimetics) set terms for IPOs last week. Santander Consumer USA Holdings, Banco Santander's US auto loan division, launched a $1.5 billion IPO. The deal will be Banco Santander's third spinoff to list in the US since 2009, after Banco Santander Brasil's 2009 IPO and Grupo Financiero Santander Mexico's (NYSE:BSMX) 2012 IPO.

EP Energy, the former E&P arm of El Paso, is seeking to raise $1.0 billion following its acquisition by an Apollo-led group for $7.2 billion in May 2012. Its oil volumes have grown at a 70% CAGR since 2011, and proved reserves as of September 30, 2013 were 513 MMBoe. CHC Group (HELI), which set terms for a $500 million IPO, provides transportation services to the offshore oil and gas industry and is one of two dominant commercial helicopter operators. Another E&P, RSP Permian (NYSE:RSPP), set terms for a $400 million IPO and has 52 MMBoe of proved reserves in the Permian Basin in Texas. Cypress Energy Partners LP (NYSE:CELP), a provider of environmental and inspection services to oil and natural gas companies, launched the fourth new energy-related deal, seeking $75 million.

Care.com, an online marketplace for finding and managing family care, launched an $80 million IPO. Its site helps 5.1 million family users and 4.4 million caregiver members in 16 countries arrange child care, senior care, special needs care, pet care, tutoring and housekeeping services. Sales grew 81% to $59 million for the nine months ended September 28, 2013.

IPOs setting terms (week of January 6, 2014)
Company (Ticker) Business Deal Size ($mm) LTM Sales ($mm)
Santander Consumer USA Holdings (SC) Auto loan originations and servicing $1,500 $3,155
EP Energy (EPE) Oil and gas E&P $1,000 $1,552
CHC Group (HELI) Commercial helicopter operator $500 $1,739
RSP Permian (RSPP) Oil and natural gas E&P $400 $113
Care.com (CRCM) Online marketplace for finding and managing family care $80 $75
Cypress Energy Partners LP (CELP) Oil and gas-related environmental and inspection services $75 $380
GlycoMimetics (GLYC) Treatments for sickle cell episodes and AML $46 $12

Thirteen companies file for IPOs

All 13 of the companies added to the pipeline filed for relatively small deals. Talmer Bancorp (NASDAQ:TLMR), a Midwestern bank with 94 branches, filed for the largest new deal, seeking $230 million. The only technology company in the group, Viggle (VGGL.RC), operates a mobile app that rewards viewers for watching their favorite shows. Nearly half of the new filers were health care companies, including three pre-commercial biotechs.

Two notable companies exited the pipeline last week. Forest Labs agreed to buy Aptalis from private equity firm TPG Capital for $2.9 billion. Aptalis (Pending:APTA), which was taken private in 2008 for $1.3 billion, had filed for a $500 million IPO late last year. LegalZoom.com (NYSE:LGZ), a provider of online legal services for consumers and small businesses, withdrew its filing following a $200 million investment from private equity firm Permira. It had set terms for a $88 million IPO but postponed the deal in August 2012.

New IPO filers (week of January 6, 2014)
Company (Ticker) Business Deal Size ($mm) LTM Sales ($mm)
Talmer Bancorp (TLMR) Regional bank in the Midwest $230 $153
City Office REIT (NYSE:CIO) Office properties REIT $115 $18
Intra-Cellular Therapies (NASDAQ:ITCI) Treatments for neurological disorders $115 $3
Installed Building Products (NYSE:IBP) Residential insulation installer $100 $404
Farmland Partners (NYSE:FPI) Farmland properties REIT $86 $2
Flexion Therapeutics (NASDAQ:FLXN) Injectable pain therapies for osteoarthritis $86 $0
Applied Genetic Technologies (NASDAQ:AGTC) Treatments for orphan eye diseases $70 $1
Square 1 Financial (NASDAQ:SQBK) Commercial banking services for venture firms $58 $58
Viggle (VGGL.RC) TV-viewing app $58 $16
KineMed (Pending:KNMD) Tests to measure disease progression $48 $7
1347 Property Insurance Holdings (NASDAQ:PIH) Property and casualty insurance in Louisiana $35 $3
Microlin Bio (NASDAQ:MCLB) Cancer diagnostics $25 $0
Aldexa Therapeutics (NASDAQ:ALDX) Treatments for rare skin and eye diseases $20 $0

IPO market snapshot

Last year the Renaissance IPO Index rose 54%. So far in 2014, the Renaissance IPO ETF (NYSEARCA:IPO), a portfolio of newly public companies, has held onto these gains, rising 0.9% YTD. This suggests likely investor interest in upcoming IPOs. There have been 58 IPOs in the past 90 days, with total proceeds of $18.5 billion and an average return of 46%. The active IPO Pipeline includes 110 companies looking to raise a total of $26.3 billion.

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