The IPO Buzz: Summer Storm

A year ago, the July 2012 calendar produced 12 IPOs.

 

Now let’s move on to the future and this week’s calendar. It has seven IPOs, which are expected to raise about $1.36 billion. As we well know, not all IPOs are equal. This week is no exception.

Reports have the IPO professionals looking at five deals: Diamond Resorts International (DRII  – proposed); NRG Yield (NYLD – proposed); OncoMed Pharmaceuticals (OMED  – proposed); RetailMeNot (SALE – proposed) and UCP (UCP – proposed).

Diamond Resorts is a Las Vegas-based resort and time-share provider. The company has 80 Diamond Resorts-branded properties with a total of 9,404 units, which it manages, plus 211 affiliated resorts and hotels and four cruise itineraries. Diamond’s time-share company has an ownership base of more than 490,000 owner-families and a worldwide network of 295 vacation destinations in 32 countries. Destinations include Hawaii and elsewhere in the United States, Canada, Mexico, the Caribbean, Central America, South America, Europe, Asia, Australia and Africa. For the 12-month period ended March 31, 2013, Diamond Resorts reported net income of $25.3 million on revenues of $568.2 million. Founded in 1996, the company has about 5,854 employees.

 

Underwriters plan to offer 15.5 million shares of Diamond Resorts at $16 to $18 each to raise $263.5 million. Diamond Resorts plans to sell 14 million shares and selling shareholders plan to sell 1.5 million shares in this offering. The IPO is expected to be priced on Thursday evening and trade Friday morning on the New York Stock Exchange under the proposed symbol “DRII.” The joint-lead managers are: Credit Suisse, BofA Merrill Lynch, J.P. Morgan and Guggenheim Securities. The co-manager is: Cantor Fitzgerald.

 

NRG Yield is a Princeton, New Jersey-based dividend growth-oriented company formed to serve as the primary vehicle through which NRG Energy (NRG) will own, operate and acquire contracted renewable and conventional generation and thermal infrastructure assets. NRG Yield’s business model involves paying a consistent and growing cash dividend to shareholders.

 

Underwriters plan to offer 19.6 million shares of Class A Common Stock of NRG Yield at $19 to $21 each to raise $361.5 million. The IPO is expected to be priced on Wednesday evening and trade Thursday morning on the New York Stock Exchange under the proposed symbol “NYLD.” The joint-lead managers are: BofA Merrill Lynch, Goldman Sachs and Citi. The co-managers are: Barclays, KeyBanc Capital Markets, Mitsubishi UFJ Securities, RBC Capital Markets, Credit Suisse and Deutsche Bank Securities.

 

(Note from NGR Yield’s prospectus: “We intend to pay a regular quarterly dividend to holders of our Class A common stock. Our initial quarterly dividend will be set at $0.30 per share of Class A common stock ($1.20 per share on an annualized basis).” That works out to a 6 percent yield. On July 12, 2013, the dividend yield for the S&P 500 Index was 2.10 percent.)

 

OncoMed Pharmaceuticals is a Redwood City, California-based clinical development-stage biopharmaceutical company focused on discovering and developing first-in-class monoclonal antibody therapeutics targeting cancer stem cells. For the 12-month period ended March 31, 2013, OncoMed reported a net loss of $20.3 million on revenues of $25.1 million. Founded in 2004, the company has about 85 employees.

 

Underwriters plan to offer 4 million shares of OncoMed at $14 to $16 each to raise $60 million. The IPO is expected to be priced on Wednesday evening and trade Thursday morning on NASDAQ Global Market under the proposed symbol “OMED.” The joint-lead managers are: Jefferies and Leerink Swann. The co-managers are: Piper Jaffray and BMO Capital Markets.

 

(Note from OncoMed’s prospectus: “Certain of our existing investors and their affiliated entities, including GlaxoSmithKline LLC (GSK), one of our collaborators, have indicated an interest in purchasing an aggregate of up to approximately $15.0 million in shares of our common stock in this initial public offering.”)

 

(Note from the IPO market: The 2013 biotech/biopharma sectors have been on fire. To date, 19 IPOs from these sectors have been priced. By Friday’s close, on July 12, 2013, 18 were winners, one was a loser, and the average gain was 44.3 percent.)

 

RetailMeNot is an Austin, Texas-based operator of digital coupons connecting consumers with leading retailers and brands. In 2012, its marketplace featured digital coupons from over 60,000 retailers and brands. The company believes it had more than 450 million total visits to its desktop and mobile websites. For the 12-month period ended March 31, 2013, RetailMeNot reported net income of $26.7 million on revenues of $155.9 million. Founded in 2007, the company has about 331 employees.

 

Underwriters plan to offer about 9.1 million shares of Series 1 Common Stock of RetailMeNot at $20 to $22 each to raise about $190 million. RetailMeNot plans to sell about 4.55 million shares and selling shareholders plan to sell about 4.55 million shares in this offering. The IPO is expected to be priced on Thursday evening and trade Friday morning on the NASDAQ Global Select Market under the proposed symbol “SALE.” The joint-lead managers are: Morgan Stanley, Goldman Sachs and Credit Suisse. The co-managers are: Jefferies, RBC Capital Markets, Stifel and Blair.

 

(Note from RetailMeNot’s prospectus: “We experience quarterly fluctuations in our operating results due to a number of factors that make our future results difficult to predict and could cause our operating results to fall below expectations or our guidance.

 

“For the three months ended June 30, 2013, we expect to report $42.0 – $42.5 million of net revenues, representing growth of 39.5% – 41.2% over the three months ended June 30, 2012. (For the three months that ended March 31, 2013, the company reported $40.6 million in net revenues.)

 

“For the three months ended June 30, 2013, we expect to report net income of $4.3 – $4.6 million, representing a decrease of 21.0% – 15.5% compared to the three months ended June 30, 2012. (For the three months that ended March 31, 2013, the company reported $6.9 million in net income.”)

 

UCP is a San Jose, California-based land and home development company operating in Northern California and the Puget Sound area of Washington State. For the 12-month period ended March 31, 2013, UCP reported net income of $3.3 million on revenues of $66.4 million. Founded in 2004, the company has about 63 employees.

 

Underwriters plan to offer 7.75 million shares of Class A Common Stock at $15 to $17 each to raise about $124 million. The IPO is expected to be priced on Wednesday evening and trade Thursday morning on the New York Stock Exchange under the proposed symbol “UCP.” The joint-lead managers are: Citigroup, Deutsche Bank Securities and Zelman Partners LLC. The co-manager is: JMP Securities.

 

This brings us to next week. At press time, there were seven IPOs on the calendar for the week of July 22. They expect to raise about $774 million. That figure could easily expand. In today’s IPO market, the calendar can fill up quickly.

 

 

Stay tuned.