It seems that the Bats Global Markets (BATS ) successful launch two weeks ago has cleared the way for more activity in the IPO markets. All Three of the companies we listed last week were able to launch raising $1.3 billion. This more than doubles the total raised this year.
Both, MGM Growth Properties (MGP ) and American Renal Associates (ARA ) also priced above the midpoint and traded up on their debuts. This marks the first time three deals in a row have priced up since the IPO market began to turn down in August 2015. It certainly cant hurt that the S&P rose 0.5% and has seen a stable rally recently. Adding to the good news the VIX Volatility Index dropped 2.6% to 13.3. The combination of these factors has provided a solid foundation for the IPO market as we move into the seasonally active May and June months where we typically see 15+ deals/month average.
The Details:
MGM Growth Properties (MGP ) raised $1.05 billion by pricing 50 million shares at $21. This was at the high end of the $18-$21 range, representing the first billion dollar IPO since First Data (NYSE; FDC) in October 2015.
American Renal Associates (ARA ) raised $165 million by pricing 7.5 million shares at $22, within the $20-$23 range, representing the first leveraged buyout since First Data. The IPO was welcomed with a 21% first day pop.
SecureWorks (SCWX ) soft performance stole the media's attention as it raised $112 million by pricing a downsized 8 million shares at $14, below the $15.50-$17.50 range. This represented the first tech IPO of 2016. The muted investor enthusiasm may serve as a wake-up call for money losing tech companies in the pipeline.
Coming up:
This week we have three more deals that are slated to raise $638 million, and interestingly enough each one has a dividend.
Red Rock Resorts (RRR ) hopes to raise $531 million in what would be the year's first consumer deal and second-largest offering, behind fellow Las Vegas casino deal MGM Growth Properties LLC. You might note that MGM's debut demonstrated strong interest in the rebounding Las Vegas market, and Red Rock could benefit similarly. While its current owners have set themselves up to hit the jackpot and receive all IPO proceeds, Red Rock's financials show that it has successfully paid down debt while improving profit margins since coming out of bankruptcy in 2011.
Looking to raise $101 million, Yintech Investment Holdings (YIN ) is China's largest provider of online spot commodity trading services, a market that has surged 35% since 2011. The profitable company has experienced rapid growth with iffy earnings. If you have never heard of this deal its because it is being marketed solely to Asian investors.
Lastly, Arizona-based micro-cap water utility Global Water Resources (GWRS ) could also go public this week as it hopes to refinance its debt. This is an IPO that has been postponing since January, and is the smallest of all offerings this week. The company hopes to raise as much as $6 million.
