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HCA breaks a three-weak US IPO absence with a record-breaking $3.8 billion deal
Analyst IPO Blog
After three weeks without any US IPOs as companies updated 4Q financials, HCA (
), the largest non-governmental hospital operator in the US, brought
back to life in a big way with a $3.8 billion deal. Backed by Bain, KKR and BofA Merrill Lynch, HCA's offering is the largest ever private equity-backed IPO on a US exchange, beating out Kinder Morgan's $2.9 billion IPO (
) in February and Nielsen's $1.6 billion offering in January (
). These three companies now make up the all-time private equity top three as 2011 is shaping up to be a banner year for large PE deals.
HCA sold 126 million shares at $30 each, above the original expectations for 124 million shares at a price between $27 and $30. Like Kinder Morgan and Nielsen, HCA priced its IPO above the midpoint of the proposed range and traded up in its debut, despite a heavily negative day in the broader market. The fact that these large IPOs have been well received speaks to the specific qualities of these deals. All three are market leaders with solid margins and strong recurring cash flow. In contrast, many smaller private equity-backed IPOs have faced pricing pressure, both last year, when 70% priced below the IPO midpoint, and this year, when a couple of deals have priced below the range.
Nevertheless, the strong receptions of these three deals will encourage other large private equity-backed companies to tap the IPO market. Toys "R" Us (
) and Freescale Semiconductor (
) have both filed for IPOs near $1 billion in size, and there are other companies rumored to be pursuing IPOs that have yet to file. With many private equity firms looking to monetize their holdings in portfolio companies and pay off LBO debt, 2011 is shaping up to be another year with significant private equity-backed IPO activity.
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As stated in the Prospectus, the total annual operating expenses for the Fund was 3.48%. The Adviser has contractually agreed to keep net expenses from exceeding 2.50% of the Fund's average daily net assets for at least a year from the date of the Prospectus and for an indefinite period thereafter subject to annual re-approval of the agreement by the Board of Trustees.
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Risk Disclosure: Investments in the
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Renaissance International IPO ETF, symbol "IPOS"
(the "ETFs"), and the
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(the "Mutual Fund") are subject to investment risk, including possible loss of the principal amounts invested. The ETFs and the Mutual Fund (the "Funds") invest in companies that have recently completed initial public offerings. These stocks are unseasoned equities lacking trading history, a track record of reporting to investors and widely available research coverage which many result in extreme price volatility. Due to a greater number of IPOs in certain segments, the Funds may also be subject to information technology and financial sector risk, small and mid-capitalization company risk, and, for the Renaissance International IPO ETF, emerging markets risk. The Funds may hold securities in the form of Depository Receipts, REITs, and Partnership Units which have greater risks than common shares. The strategies have high portfolio turnover and securities lending risks. The returns of the ETFs may not match the return of the respective indices. The ETFs are classified as non-diversified investment companies subject to concentration risk.
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Definitions: The Renaissance IPO Index® is a stock market index based upon a portfolio of U.S.-listed newly public companies that includes securities prior to their inclusion in core U.S. equity portfolios. The S&P 500® Index is a stock market index based on the market capitalizations of 500 large companies whose common stock is publicly traded on the NYSE.
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