Although prolonged uncertainty in Europe is keeping the IPO market fragile, there is cause for optimism after the first week of 2012. U.S. employment gains are exceeding expectations, the Russell 2000 and S&P are nearing three-month highs, and the VIX has remained under 25 for the third straight week.
This was the cheery backdrop for the filing of seven significant U.S. IPOs, with estimated proceeds totaling over $1.8 billion. The new filings, all profitable on a cash flow basis, originated from the sectors that were most prominent in 2011: Energy and technology.
The energy sector led the way with three new filings, reflecting a rise in oil prices, investor demand for yield and increased opportunities in U.S. independent drilling. Last month, seven of 11 pricings were energy related, and have posted an average return of -1% through January 6.
Two of the three filings were by trusts.
Pacific Coast Oil Trust (ROYT), formed by Los Angeles-based Pacific Coast Energy, registered with the SEC for a $345 million initial public offering on Friday and owns net profits interests in 265 producing wells. SandRidge Mississippian Trust II (SDR), formed by Oklahoma City-based SandRidge Energy, registered with the SEC for a $604 million initial public offering. It holds royalty interests in 67 producing horizontal wells and 206 horizontal development wells in the Mississippian formation.
An independent company made the third filing. Ute Energy (UTE), an oil and natural gas E&P operating in the Uinta Basin, filed with the SEC to raise up to $250 million in its IPO. The Denver-based company, founded in 2005, booked $70 million in sales for the 12 months ended September 30, 2011.
Another energy company, Renewable Energy Group (REGI), launched the first U.S. IPO of the year and is pricing next week. Among typically low or zero revenue biofuel companies, the Ames, IA,-based company is notable for its $627 million in sales for the 12 months ended September 30, 2011. The largest producer of biodiesel in the United States, it emerged from a large group of biofuel companies in the IPO pipeline.
Three technology companies filed last week.
Millennial Media (symbol MMD.RC), the number two mobile ad platform, reaches all major mobile operating systems and booked $69 million in sales for the nine months ended September 30, 2011, a 138% increase over the same period in 2010. Backers include Bessemer Venture Partners, Columbia Capital, Charles River Ventures and New Enterprise Associates.
Infoblox (BLOX), a data center provider, is backed by Sequoia Capital and has reached over 5,000 customers, including Boeing, IBM and Johnson & Johnson. Its CEO, Robert Thomas, and CFO, Remo Canessa, previously held the same roles for NetScreen Technologies, which sold for $4 billion in 2004. For the 12 months ending October 31, 2011, sales reached $143 million.
Health benefits manager Extend Health (XH), backed by venture capital firm Psilos Group Managers, had sales of $55 million for the 12 months ended September 30, 2011. Also filing was Peruvian cement producer Cementos Pacasmayo (CPAC), which is already listed in Peru and currently sees minimal trading volume.
On Monday, Guidewire Software (GWRE) announced it would be pricing on January 24th. The on-demand subscription software provider posted net profits of $38.5 million for the 12 months ended October 31, 2011, and sales grew by 51% for the most recent quarter. Based in San Mateo, CA, the company plans to raise $82.5 million by offering 7.5 million shares at a price range of $10.00 to $12.00.
Despite mixed performance in the second half of 2011, the U.S. IPO backlog now numbers 210, the highest level since 2000.