After BATS (BATS:BATS) successfully priced its upsized IPO (+21% first day), the market will be tested again in the week ahead with three additional large, established businesses coming to market.
If all three price successfully, this would provide solid momentum for the IPO market heading into May and June, two of the most active months of the past ten years with 15+ deals a month on average.
Three companies look to raise $1.3 billion total
MGM Growth Properties (NYSE:MGP) - MGM's initial portfolio of 10 gaming properties, primarily located on The Strip, would generate initial annual rent of $550 million. The REIT is being carved out of MGM Resorts and will carry debt. It plans an initial dividend of $1.43 per share, yielding 7.3% at the midpoint.
American Renal Associates (NYSE:ARA) - Led by its two founders, it has grown from one clinic in 2000 to 192 clinics at the end of 2015. American Renal plans to open 32 new clinics over the next two years. While highly levered, the nature of the business provides steady revenues with low volatility.
SecureWorks (NASDAQ:SCWX) - While still unprofitable, it has maintained strong growth and continues to narrow cash burn relative to GAAP losses. For the fiscal year ended January 29, 2016, revenue increased 29.5% and cash flow from operations was $(9.8) million compared to net loss of $(72.4) million. If successful, it will be the year's first tech IPO.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is down 5% year-to-date. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Alibaba (NYSE:BABA), Synchrony Financial (NYSE:SYF) and Citizens Financial Group (NYSE:CFG). The Renaissance International IPO Index is down 4% year-to-date, compared to -2% for ACWX. Renaissance Capital's International IPO ETF (NYSE: IPOS) tracks the index, and top ETF Holdings include NN Group and Aena S.A.