The IPO Buzz: Fast Traffic on the IPO Highway

Hello, 2014!

 

The Tuesday entry was GlycoMimetics (GLYC), a Gaithersburg, Maryland-based clinical stage biotechnology company that is focusing on the discovery and development of novel drugs to treat diseases ranging from sickle-cell anemia to cardiovascular disease and certain types of cancer. The deal had the magic words for a bio-IPO: Its offering price was CUT to a single digit – $8 per share, DOWN from $14 to $16 – and it has a COLLABORATION agreement (with Pfizer (PFE) and it has COLLABORATION REVENUES. That did it. Its stock opened at $10.40 on Friday morning. GlycoMimetics closed on Friday at $9.01.

 

With GlycoMimetics’ debut, the 2014 IPO year was off and running. That left seven deals on the new year’s IPO calendar – with five set for this week alone and bankers expecting to raise $2.1 billion.

 

This year was the earliest start for the IPO market in over 10 years, according to the SEC filings. On Jan. 7, 2004, K-Sea Transportation priced 3.6 million common units at $23.50 each. It closed its opening day at $26.50 and was acquired on March 3, 2011, by Kirby Corporation (KEX). Shareholders had a choice of accepting $8.15 per share in cash or $4.075 in cash plus 0.0734 share of Kirby.

 

By the time 2004 was completed, 239 IPOs had come to market.

 

Now let’s fast forward a decade to the present.

 

Ten companies filed plans to go public last week, which was the first full week of 2014. They are looking to raise about $750 million. Another 11 companies filed updated amendments. They are looking to raise about $4.7 billion. And three companies withdrew plans to go public. (Note: Two of the withdrawals had previously been postponed “due to market conditions.” They were: LegalZoom.com postponed in August 2012 and GCT Semiconductor postponed in March 2012.)

 

 

The energy sector is “in play” with three names on the calendar. One deal is said to be drawing some interest from investors. It is a billion-dollar offering by EP Partners (EPE – proposed).

 

EP Partners is a Houston-based independent exploration and production company. EP Partners is engaged in the acquisition and development of unconventional onshore oil (shale oil) and natural gas properties in the United States. The company’s drilling inventories are located in four core areas of the Eagle Ford Shale (South Texas), the Wolfcamp Shale (Permian Basin in West Texas), the Uinta Basin (Utah) and the Haynesville Shale (North Louisiana). The company has over 5,200 drilling locations of which about 96 percent are oil wells. EP Partners reports it has, at current activity levels, about 24 years of drilling inventory. EP Partners, a holding company formed in 2013, has about 4,500 employees.

 

Underwriters plan to offer 40 million shares of EP Partners at $23 to $27 each to raise about $1 billion. The IPO is expected to be priced Thursday evening and trade Friday morning on the New York Stock Exchange. The joint-lead managers are: Credit Suisse, J.P. Morgan, Citigroup, Goldman Sachs, Morgan Stanley, Deutsche Bank Securities, UBS Investment Bank, BMO Capital Markets, RBC Capital Markets and Wells Fargo Securities. The co-managers are: Evercore, Tudor Pickering Holt, Barclays, Jefferies, BofA Merrill Lynch, BBVA, Nomura, Scotiabank/Howard Weil, SOCIETE GENERALE, TD Securities, Capital One Securities, CIBC, SunTrust Robinson Humphrey, ING, Mizuho, SMBC Nikko, Stephens, Lebenthal Capital Markets and Topeka Capital Markets.

 

Rounding out the rest of this week’s energy deals are: Cypress Energy Partners, L.P. (CELP  – proposed) and RSP Permian (RSPP – proposed).

 

Cypress Energy is a Tulsa, Oklahoma-based limited partnership that provides saltwater disposal and other water and environmental services to U.S. onshore oil and natural gas producers and trucking companies. Cypress was formed in 2011. The company plans to offer 3.75 million common units at $19 to $21 each to raise $75 million. The deal is expected to be priced Wednesday evening to trade Thursday morning on the New York Stock Exchange. The joint-lead managers are: Raymond James, Baird, Stifel and BMO Capital Markets. The co-managers are: Janney Montgomery Scott and Wunderlich Securities.

 

(Note: Cypress Energy intends to make a minimum quarterly distribution of $0.3875 per unit ($1.55 on an annualized basis) to yield 7.75 percent at the mid-point of its pricing range.

 

RSP Permian is a Dallas-based independent oil and natural gas company. RSP is focused on the acquisition, exploration, development and production of unconventional oil and associated liquids-rich natural gas reserves in the Permian Basin of West Texas. Since the company’s inception in 2010, it has participated in the drilling of over 300 vertical Wolfberry wells and served as the operator of over 180 of those wells and, in late 2012, shifted its primary focus to drilling horizontal wells. RSP, formed in 2010, has about 35 employees. The company plans to offer 20 million shares at $19 to $21 each to raise $400 million. The company plans to sell 9.2 million shares and selling shareholders plan to sell 10.8 million shares. The deal is expected to be priced Thursday evening to trade Friday morning on the New York Stock Exchange. The joint-lead managers are: Barclays, J.P. Morgan, Tudor Pickering Holt, Raymond James, RBC Capital Markets and UBS Investment Bank. The co-manager is: Jefferies.

 

 

CHC Group Ltd.(HELI – proposed) is a Cayman Islands-based commercial operator of helicopters with operations based on six continents. The company said that it is one of only two global commercial helicopter service providers to the offshore oil and gas industry. CHC Group believes is it’s the world’s largest in its industrial sector. Formed in 1987, CHC Group has about 4,500 employees. The company plans to offer 29.4 million shares at $16 to $18 each to raise $500 million. The deal is expected to be priced Thursday evening to trade Friday morning on the New York Stock Exchange. The joint-lead managers are: J.P. Morgan, Barclays and UBS Investment Bank. The co-managers are: HSBC, RBC Capital Markets, Wells Fargo Securities, BNP PARIBAS, Standard Bank, Cormark Securities (USA), Cowen, Raymond James, Simmons and Tudor, Pickering, Holt.

 

Looking into next week, the IPO calendar has two names. They are expected to raise about $1.58 billion. But those numbers could grow by the time that Monday, Jan. 13, rolls around.

 

 

Stay tuned.