Written by: John Fitzgibbon
Fasten your seatbelts for a wild ride on the IPO highway. The technology sector is arriving. There is one deal on this week's calendar plus three on next week's; the filings continue to build, and their aftermarket performances are breathtaking.
Castlight Health (CSLT - proposed), a San Francisco-based provider of cloud-based software to manage healthcare costs, tops this week's IPO calendar.
Next week has Amber Road (AMBR - proposed), an East Rutherford, New Jersey-based provider of cloud-based global trade management solutions; Paylocity Holding (PCTY - proposed), an Arlington Heights, Illinois-based provider of cloud-based payroll and human capital management software solutions; and Q2 Holdings (QTWO - proposed), an Austin, Texas-based provider of secure cloud-based virtual banking solutions.
Two tech companies filed plans to go public last week:
Five9 (FIVN - proposed), a San Ramon, California-based provider of cloud software for contact centers, and Opower (OPWR - proposed), an Arlington, Virginia-based provider of cloud-based software for the utility industry.
Up, Up and Away
Since the Labor Day break in September, the IPO technology sector has been on fire. From Sept. 3, 2013, through March 7, 2014, the technology sector has priced 18 IPOs, according to the U.S. Securities and Exchange Commission filings. Seventeen were in the winner's circle, one wasn't, and the average gain for all 18 was 123.1 percent from their initial offering price. Additionally, 10 were up 100 percent or more.
The best performer was FireEye (FEYE), a Milpitas, California-based provider of virtual machine-based IT security software. On Sept. 19, 2013, the company priced its IPO at $20 per share. It closed its opening day at $36, and closed Friday at $81.64, UP 305.2 percent from its initial offering price.
Let's take a look at the recent past. Last week's calendar of Feb. 24, produced:
COUPONS.com (COUP), a Mountain View, California-based provider of digital coupons, priced its IPO of 10.5 million shares at $16 each, UP from 10 million shares at $13 to $14 each on Thursday evening, March 7. It closed Friday at $30, UP 87.5 percent from its initial offering price.
The previous week's calendar of Feb. 17, produced:
Varonis Systems (VRNS), a New York City-based provider of a software platform that lets companies manage and protect their unstructured data, priced its IPO of 4.8 million shares at $22 each, UP from 4.8 million shares at $17 to $19 each on Thursday evening, Feb. 27. It closed Friday, Feb. 28, at $44, UP 100 percent from its initial offering price, and closed Friday, March 7, at $53.48, UP 143.1 percent from its offering price.
That brings us to this week and its IPO calendar. All told, there are five deals looking to raise about $450 million. Most of the dollar volume comes from two offerings. They are Castlight Health and Diamond S Shipping (DSG - proposed).
Health, Wealth and Oil
Castlight Health is a provider of cloud-based software that enables enterprises to gain control over their healthcare costs. Castlight's Enterprise Healthcare Cloud allows customers to provide personalized, actionable information to their employees, implementing technology-enabled benefit designs and integrating disparate systems and applications. Formed in 2009, Castlight Health has about 287 employees.
Underwriters plan to offer 11.1 million shares of Castlght Health at $9 to $11 each to raise about $111 million. The IPO is expected to be priced Thursday evening and trade Friday morning on the New York Stock Exchange. The joint-lead managers are: Goldman Sachs and Morgan Stanley. The co-managers are: Allen & Company, Stifel, Canaccord Genuity and Raymond James.
Diamond S Shipping Group is a Greenwich, Connecticut-based provider of seaborne transportation of refined petroleum and other products in the international shipping markets. The company operates a fleet 33 MR product tankers. Thirty are with 30 under-time charters; the remaining three operate in the spot market. Formed in 2007, Diamond S Shipping has about 29 employees.
Underwriters plan to offer 14 million shares of Diamond S Shipping at $14 to $16 each to raise about $210 million. The IPO is expected to be priced Tuesday evening and trade Wednesday morning on the New York Stock Exchange. The joint-lead managers are: Jefferies and BofA Merrill Lynch. The co-managers are: DNB Markets, HSBC, SEB, Global Hunter Securities, Fearnley Securities and Stifel.
There are only five deals on next week's IPO calendar. Three cloud-based companies are on tap for the week of March 17, which happens to be St. Patrick's Day. There's still a lot of time to add more names early this week.
Disclosure: Neither the author nor anyone else on the SyndicatePro.com staff has a position in any stocks mentioned, nor do we trade or invest in IPOs. The author and SyndicatePro.com staff do not issue advice, recommendations or opinions.