U.S. IPO Recap: 2013 Passes 2012 In Proceeds Raised

by: Renaissance Capital IPO Research

A week with nine U.S. IPOs pushed 2013's total proceeds raised to $43.4 billion, ahead of 2012's $42.4 billion and trailing only 2007’s $48.7 billion for the highest total since the tech bubble. October ended with 30 pricings (and 30 filings), putting 2013, with 182 IPOs completed to date, in position to challenge 2004’s post-tech bubble high of 217 IPOs. Given that a year-to-date record 16 deals set terms last week, the record might not even last until Thanksgiving. With 15 deals on the IPO calendar, this coming week could see the most IPO pricings in a week since 2006.

The Container Store has sixth 100%+ first-day pop of 2013

Two of the eight IPOs last week, storage retail chain The Container Store (NYSE:TCS) and Chinese travel search engine Qunar.com (NASDAQ:QUNR), placed among 2013's top 10 first-day returns, finishing up 101% and 89% respectively. The week’s other Chinese deal, classifieds website 58.com (NYSE:WUBA), also performed well, gaining 42% on its first day and finishing the week up 47%. Blackstone-backed REIT Brixmor Property Group (NYSE:BRX) completed the largest deal, raising $825 million by offering extra shares, and traded up 4% after pricing at the midpoint. Overall, the majority of the deals (five of eight) priced above the proposed range. Only one company, diagnostic company Veracyte (NASDAQ:VCYT), ended the week below its offer price.

IPO pricings (week of October 28, 2013)
Company (Ticker) Business Deal Size ($mm) IPO Price vs. Midpoint Return as of 11/1
The Container Store (TCS) Storage products chain $225 20% 101%
Qunar.com (QUNR) Chinese travel search $167 43% 89%
58.com (WUBA) Chinese classifieds $187 21% 47%
Essent Group (NYSE:ESNT) Mortgage insurance $335 17% 33%
Marcus & Millichap (NYSE:MMI) Real estate brokerage $72 -20% 16%
Criteo (NASDAQ:CRTO) Display ad retargeting $251 27% 10%
Surgical Care Affiliates (NASDAQ:SCAI) Surgical facilities $235 7% 9%
Brixmor Property (BRX) Shopping centers $825 0% 4%
Veracyte (VCYT) Cancer diagnostics $65 -7% -5%

Sixteen companies set terms

With 16 companies setting terms last week, the number of IPOs (excluding SPACs) scheduled to price has swelled to 21, which could lift 2013 over the 200-deal mark. A quarter of the companies that launched were biotechs. Two were e-commerce sites: textbook rental company Chegg (NYSE:CHGG) launched a $158 million deal, and family apparel daily deals site zulily (NASDAQ:ZU) launched a $196 million deal. Another major textbook company, Houghton Mifflin Harcourt (NASDAQ:HMHC), set terms seeking $274 million. Extended Stay America (NYSE:STAY) launched the week’s largest new deal, with estimated proceeds of $551 million. Extended Stay’s 682 hotels make it the largest operator of company-branded hotels in the US. It was bought out of bankruptcy for $3.9 billion in 2009 by Blackstone, Centerbridge and Paulson & Co.

IPOs setting terms (week of October 28, 2013)
Company (Ticker) Business Deal Size ($mm) LTM Sales ($mm)
Extended Stay America (STAY) Hotel chain $551 $1,082
Midcoast Energy Partners (NYSE:MEP) Natural gas assets $370 $6,627
Houghton Mifflin Harcourt (HMHC) Educational content publisher $274 $1,362
JGWPT Holdings (JGW) Buys payment streams $250 $484
Eros International (NYSE:EROS) Distributes Indian films $200 $208
zulily (ZU) Family apparel deals $196 $567
Chegg (CHGG) Online textbook rental $158 $247
LGI Homes (NASDAQ:LGIH) Southern US homebuilder $126 $192
Blue Capital Reinsurance (NYSE:BCRH) Property reinsurance $125 $0
Arc Logistics Partners LP (NYSE:ARCX) Energy logistics assets $120 $34
Relypsa (NASDAQ:RLYP) Elevated potassium treatment $120 $0
Norcraft Companies (NYSE:NCFT) Cabinetry manufacturer $100 $330
Karyopharm Therapeutics (NASDAQ:KPTI) Cancer treatments $85 $0
Celladon (CLDN) Heart disease treatments $75 $0
GlycoMimetics (NASDAQ:GLYC) Orphan disease treatments $60 $12
NMI Holdings (NASDAQ:NMIH) Private mortgage insurance $25 $2

Street-themed retailer is the week's only new filer

With the chance passed for new filers to price before Thanksgiving, only one company entered the IPO pipeline last week. DTLR Holding, which sells street-inspired footwear, apparel and accessories in 95 eastern US stores, filed for a $75 million IPO. For the 26 weeks ended August 3, 2013, its comparable store sales increased 7.9%, and its total net sales increased 9% to $101 million.

New IPO filers (week of October 28, 2013)
Company (Ticker) Business Deal Size ($mm) LTM Sales ($mm)
DTLR Holding (DTLR) Street-inspired footwear and apparel retailer $75 $190

IPO market snapshot

The 182 IPOs in 2013 have raised $43.4 billion and produced an average return of 32%. There have been 66 IPOs in the past 90 days, with total proceeds of $18.2 billion and an average return of 26%. The active IPO pipeline includes 109 companies looking to raise a total of $31.6 billion.