Rackspace Technology, the cloud tech company, and Rocket Companies, the online mortgage broker, are two marquee names on the IPO Calendar this week. Billionaire Ron Burkle’s SPAC, Yucaipa Acquisition, adds its star power to the mix. Nine companies plan to go public this week. Bankers expect to raise $5.4 billion. Rocket’s IPO is a $3.2 billion deal – or about 59.3 percent of the week’s estimated total in IPO proceeds.
By Monday morning, these numbers could increase after the SEC’s filing window opens again for business. That would be in sync with this summer’s trend. Week after week, the IPO Calendar has grown after a rush of amended filings on Monday morning.
The traffic at the U.S. Securities and Exchange Commission’s filing window last week looked like the last turn in a NASCAR race. Sixteen new IPO filings (S-1s and F-1s) rolled in, with those companies and their bankers aiming to raise $3.38 billion. In addition, 19 amended filings (S-1/A and F-1/A filings) flooded in from companies expecting to raise about $7.4 billion.
Twelve IPOs were priced in July’s final week. Blank checks or special-purpose acquisition companies (SPACs) accounted for five of those deals.
Nine IPOs This Week
Let’s take a look at the nine companies, including three SPACs, expecting to go public this week. One caveat: Pay close attention to the proposed stock symbols because two big IPOs this week have similar proposed symbols – or tickers – although they are listed on different exchanges:
* Rackspace Technology has the proposed symbol of RXT for its stock on the NASDAQ.
* Rocket Companies has the proposed symbol of RKT for its stock on the New York Stock Exchange.
By popular demand, we’re highlighting some “risk factors” here as well. However, we recommend that you do your own due diligence by clicking on the prospectus link on an IPO’s profile on IPOScoop.com. That takes you to the SEC documents. “Risk Factors” are listed in the Table of Contents of each prospectus.
Monday night pricing for Tuesday trading:
Yucaipa Acquisition Corp. (YAC.U proposed), based in Los Angeles, is a newly organized SPAC that has not yet identified a target business sector.
Billionaire Ron Burkle is the star-studded name behind this blank check or SPAC IPO of 30 million units at $10 each to trade on the NYSE.
Burkle founded The Yucaipa Companies, a private equity firm, in 1986. He made his name – and his fortune – by buying and selling major grocery chains. He’s done mergers and acquisitions valued at more than $40 billion in the past 34 years, Yucaipa Acquisition’s prospectus says. Burkle is one of the leading investors in the retail, distribution, technology, entertainment, sports and hospitality industries. He’s the largest investor in SoHo House, a global network of private clubs catering to the under-35 set.
In the Yucaipa Acquisition prospectus, the “Risk Factors” section begins on page 33. It includes this line: Our shareholders may not be afforded an opportunity to vote on our proposed initial business combination, which means we may complete our initial business combination even though a majority of our shareholders do not support such a combination.
Tuesday night pricing for Wednesday trading:
BigCommerce Holdings (BIGC proposed), based in Austin, Texas, is a software company and the provider of a cloud-based platform for businesses to create online stores. As of June 1, 2020, the company served about 60,000 online stores in about 120 countries, the prospectus says. Its competitors include Shopify.
This is an IPO of 6.85 million shares at $18 to $20 each to trade on the NASDAQ.
In the BigCommerce prospectus, the “Risk Factors” section starts on page 22. One line stands out: We have a history of operating losses, and we may not be able to generate sufficient revenue to achieve and sustain profitability.
GO Acquisition (GOAC.U proposed), based in New York, is a blank check company or a SPAC that intends to focus on travel-related and travel-adjacent businesses with either all or a substantial portion of their activities in North America or Europe. This would include companies that provide visa processing, settlement systems and payment platforms.
This is an IPO of 50 million units at $10 each to trade on the NYSE.
The “Risk Factors” section of GO Acquisition’s prospectus begins on page 31. It includes this line:
The recent coronavirus (COVID-19) pandemic and the impact on business and debt and equity markets could have a material adverse effect on our search for a business combination, and any target business with which we ultimately complete a business combination.
Rackspace Technology (RXT proposed), based in San Antonio, Texas, describes itself as a leading end-to-end multi-cloud technology services company. Companies use Rackspace to store and access their data.
This is an IPO of 33.5 million shares at $21 to $24 each to trade on the NASDAQ. This deal marks Rackspace’s return to being a publicly traded company, as the San Antonio Express-News pointed out. Rackspace initially went public in 2008. In 2016, private equity firm Apollo Global Management acquired Rackspace in a deal valued at $4.3 billion. Apollo is still the biggest shareholder in Rackspace, with a 78.3 percent stake. After the IPO, Apollo’s stake could fall to 63.5 percent.
In the Rackspace prospectus, the “Risk Factors” section begins on page 16. Two items stand out:
*On page 18, the company points out that “we have a history of losses and may not be able to achieve profitability in the future.”
* On page 20, the company says: “We are a highly leveraged company. As of March 31, 2020, we had $3,987.5 million face value (equals $3.9875 billion or $4 billion) of outstanding indebtedness … “
Vistas Media Acquisition (VMACU proposed), based in New York, is a blank check company or a SPAC that intends to focus its search for a target company in the media and entertainment sector. Specifically, the company will search for content, film, post-production and/or visual effects facilities, animation, streaming, augmented and virtual reality, music, digital media, gaming and e-sports.
This is an IPO of 10 million units at $10 each to trade on the NASDAQ.
In the Vistas Media prospectus, the “Risk Factors” section starts on page 32. This line on page 37 stood out: Because of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete our initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive only their pro rata portion of the funds in the trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
Wednesday night pricing for Thursday trading:
Acutus Medical (AFIB proposed), based in Carlsbad, California, is an arrhythmia management company focused on improving the way cardiac arrhythmias are diagnosed and treated. The company designs, makes and markets a range of tools for catheter-based ablation procedures to treat various arrhythmias.
This is an IPO of 7.35 million shares at $16 to $18 each to trade on the NASDAQ.
In the Acutus Medical prospectus, the “Risk Factors” section starts on page 20. Please note on page 46: We have a history of net losses, and we expect to continue to incur losses for at least the next several years. If we ever achieve profitability, we may not be able to sustain it.
Oak Street Health (OSH proposed), based in Chicago, operates a primary care delivery platform designed to improve the quality of healthcare for Medicare-eligible patients while helping providers and payors lower medical costs. The company was founded in 2012.
This is an IPO of 15.63 million shares at $15 to $17 each to trade on the NYSE.
In the Oak Street Health prospectus, the “Risk Factors” section begins on page 20. On that page, this line stands out: We have a history of net losses, we anticipate increasing expenses in the future, and we may not be able to achieve or maintain profitability.
Rocket Companies (RKT proposed), based in Detroit, is the parent of online mortgage broker Rocket Mortgage, which has provided more than $1 trillion in home loans since the company, formerly known as Quicken Loans, was founded. This company is profitable. It has expanded into real estate services, personal loans and auto sales.
This is an IPO of 150 million shares at $20 to $22 each to trade on the NYSE. Based on the midpoint of that price range, the Rocket IPO is expected to raise $3.15 billion.
In the Rocket Companies prospectus, the “Risk Factors” section starts on page 36. On page 48, the company discloses that it agreed to pay $32.5 million, including $7 million in accrued interest, in a settlement with the U.S. Department of Justice to resolve a lawsuit stemming from a claim that it violated the federal False Claims Act. On June 14, 2019, The Wall Street Journal reported on the settlement agreement, noting it resolved a lawsuit stemming from the housing market’s collapse a decade earlier.
Thursday night pricing for Friday trading:
IBEX Ltd. (IBEX proposed), based in Hamilton, Bermuda, is a leading global customer experience company. It provides customer support to Fortune 500 companies and New Economy “disruptor” companies.
This is an IPO of 4.8 million shares at $20 to $22 each to trade on the NASDAQ.
In the IBEX prospectus, the “Risk Factors” section begins on page 26. Right up front, IBEX discloses two risk factors worth noting:
*The COVID-19 pandemic has adversely impacted our business and results of operations.
* Frontier Communications Corp., our largest client by revenue as of March 31, 2020, has filed (on April 14, 2020) a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code, which could have a material adverse effect on our business, financial conditions, results of operations and cash flows. (See page 48 for more details about Frontier, a telecom company.)
(For more information about these companies, please check the IPO profiles on IPOScoop.com’s website.)
Week of Aug. 10th
There are no IPOs scheduled yet for the week of Aug. 10th. But that could change in a heartbeat when the SEC’s filing window opens again for business on Monday, Aug. 3rd.
Stay tuned.
Disclaimer: A SCOOP Rating (Wall Street Consensus of Opening-day Premiums), is a general consensus taken, at press time, from Wall Street and investment professionals concerning how well an IPO might perform when it starts trading. The SCOOP Rating does not reflect the opinions of anyone associated with IPOScoop.com. The SCOOP ratings should not be taken as investment advice. The rating merely reflects the opinion of the professionals at the time of publication and is subject to last-minute changes due to market conditions, changes in a specific offering and other factors, such as changes in the proposed offering terms and the shifting of investor interest in the IPO. The information offered is taken from sources we believe to be reliable, but we cannot guarantee the accuracy.
Disclosure: Nobody on the IPOScoop.com staff has a position in any stocks mentioned above, nor do they trade or invest in IPOs. The IPOScoop.com staff does not issue advice, recommendations or opinions.