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Both IPOs performed well last week in a much needed reversal
for the
US IPO market
. Although Alon USA Partners (
ALDW
) and YY Inc. (
YY
) both priced below their midpoints, each made gains in its first
day of trading. This followed two weeks in which five IPOs
postponed and the only company to complete its IPO, Ruckus
Wireless (
RKUS
), had an 18% first-day drop. The turnaround opens the
possibility of an active December, with three companies already
signaling intentions of completing IPOs before the end of the
year.
Very high yield drives interest in Alon
A low interest rate environment has raised demand for high-yield
LPs recently, but none has offered a higher yield than Alon USA
Partners. The Texas-based oil refiner projected a next-twelve
months yield of 32.5% at its IPO price, more than twice the yield
offered by close peer Northern Tier (
NTI
). By pricing below the range of $19 to $21, the company raised
$160 million, and the stock jumped 15% on the first day of
trading. Goldman Sachs, Credit Suisse and Citi acted as joint
bookrunners on the deal.
First US IPO from China since March gains 7%
YY, a Chinese social platform that enables group communication
via voice, text and video, raised $82 million by pricing at
$10.50, the low end of the $10.50 to $12.50 range. It was the
first US IPO from a Chinese company since Vipshop (
VIPS
) went public in March. The high-growth company (revenue is up
168% YTD to $88 million) gained 8% on its first day. Venture
backers include Morningside, Steamboat Ventures, Granite Global
and Tiger Global. Morgan Stanley, Deutsche Bank and Citi acted as
joint bookrunners.
Three deals tentatively scheduled for December
Although no new companies filed or launched last week, Reuters
reported that solar panel installer SolarCity (SCTY) would
attempt to go public in December. It is now the third company
slated for December, after Gladstone Land Corporation (LAND), a
small agricultural REIT, and Audeo Oncology (AURX), a biotech,
set terms earlier this month for $50 million and $49 million IPOs
respectively.
Large volume of pipeline updates
Seven more companies released updates to their filings last week,
and, in the past 90 days, 48 companies have updated their
filings, creating a large pool of candidates for IPOs next month.
Some prominent names include apartment REIT Archstone (ASN),
child care provider Bright Horizons (BFAM), petroleum refiner PBF
Energy (PBF) and cokemaking LP SunCoke Energy Partners (SXCP).
Altogether, the
US IPO pipeline
holds 123 companies looking to raise $39.6 billion.
US IPO performance rebounds
Bouncing back from the lows of last week,
recent US IPOs
enjoyed a strong week. The 33 IPOs from the past 90 days have
produced an average aftermarket return (excluding first-day
returns) of 2% and an average total return of 15% (vs. 0% and 12%
respectively last week). In 2012, there have been 124 IPOs, just
one shy of last year's total, which have raised a total of $41.4
billion. The average aftermarket return year-to-date is 1%, and
the average total return is 14%, compared with -2% and 11% last?