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US IPO Week Ahead: IPO market is back in session with 4 deals
Analyst IPO Market Commentary
After four weeks without a single IPO, the US IPO market is back from its annual August pause. Four deals are on the
to raise $690 million in the week ahead, including:
• The first energy IPO in over a year, an MLP with a 7.5% annualized yield
• A VC-backed tech company (2016's tech IPO class is up over +100% on average)
• A large Bermuda bank and wealth manager with a 5.4% annualized yield
• A small but fast-growing regional bank in Tennessee
• The week could also see offerings from a small biotech and SPAC
Renaissance Capital's IPO Calendar - Week of 9/12/2016
The Bank of N.T. Butterfield & Son
$22 - $25
Bank and wealth manager operating in Bermuda and the Cayman Islands.
Noble Midstream Partners LP
$19 - $21
MLP formed by Noble to own oil and gas gathering assets in Colorado's DJ basin.
$16 - $18
UBS Investment Bank
Tennessee bank with 45 branches and $2.9 billion in assets.
$11 - $13
BofA Merrill Lynch
Provides mass messaging and critical communications services to enterprises.
M I Acquisitions
New York, NY
$10 - $10
Chardan Capital Markets
Blank check company formed to acquire a technology, media or telecom company.
$6 - $8
Network 1 Financial
Developing non-systemic biologics for gastrointestinal disorders.
2016's first energy IPO hopes a 7.5% yield will get it the royal treatment
Noble Midstream Partners LP
) is the first energy company to attempt an IPO since its last attempt in November 2015. The last US oil and gas IPO was
PennTex Midstream Partners LP
; -12%). Noble will test investors' hunger for yield (7.5% at the midpoint) and aversion to energy growth stories.
Building bridges: VC-backed Everbridge sets the tone for tech
) plans to raise $90 million (17% insider selling) at a market cap of $329 million, kicking off a series of tech IPOs anticipated in the coming weeks. Backed by ABS Ventures, Everbridge offers a platform for organizations to send mass communications during critical situations (e.g. cyber attacks, earthquakes, etc.). Operating in a more than $2.5 billion market, it grew sales by 30% in the 1H16 to $36 million. However, with cash flows top-of-mind, IPO investors may focus on the company's now-negative adjusted EBITDA (-6%).
Buying into Bermuda
The Bank of N.T. Butterfield & Son
) plans to raise $250 million (44% insider selling) at a market cap of $1.3 billion. Backed by The Carlyle Group and Wellington, Butterfield Bank has captured more than one-third of the deposit share in Bermuda and the Cayman Islands, balanced by a large asset management and trust services business. While it offers a 5.4% yield at the midpoint, its total revenue growth was just 2% in 2015 ($379 million) and tax havens have recently faced scrutiny from US regulators.
) is set to raise $100 million at a market cap of $421 million. The Tennessee bank's pro forma net income grew at a +33% CAGR from 2011-2015. Two Tennessee banks went public in 2015, outperforming the the year's financial IPOs:
Franklin Financial Network
) trades 77% above its March 2015 IPO price, while
) was acquired at a 79% premium to its February 2015 IPO price.
Two micro-cap IPOs
), a gastrointestinal biotech, is again on the IPO calendar this week, but with new terms: It recently reduced its share offering by 21%, and now intends to raise $12 million at a market cap of $74 million.
M I Acquisitions
), a blank check company led by a 28-year-old CEO, plans to raise $50 million.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is up 2% year-to-date, while the S&P 500 is up 4%. Renaissance Capital's
(NYSE: IPO) tracks the index, and
top ETF holdings
include Alibaba (
), Synchrony Financial (
) and Citizens Financial Group (
). The Renaissance International IPO Index is up 1% year-to-date, compared to +4% for ACWX. Renaissance Capital’s International
(NYSE: IPOS) tracks the index, and
top ETF holdings
include NN Group and Aena S.A.
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