The IPO Buzz: Life After Twitter

Facebook priced its IPO on May 17, 2012. It was the only deal of the week, and that was not a happy time on Wall Street. The stock market was slipping into a correction phase.

 

Backing up a bit, the downward spiral started on April 2, 2012, when the Nasdaq Composite Index closed at 3,119.57. The Nasdaq bottomed out two months later, closing on June 1 at 2,747.48, DOWN 11.9 percent from its previous closing high.

 

There are countless examples that the IPO market flourishes in bull markets and dries up in down markets. The Facebook IPO was classic. It was priced during a stock market correction. The next IPO was priced on June 26 – six weeks later. That’s a problem we do not have in today’s market.

 

The Dow Jones Industrial Average and the S&P 500 Index closed on Friday, Nov. 8, at record highs. The rally set the stage for this week’s IPO calendar and its dozen offerings.

 

The calendar has five healthcare-related IPOs, two educational book providers, a “blank check” deal, a limited partnership, an online “flash sale” marketplace, a REIT and a Bollywood movie producer.

 

This week’s “IPOs of Interest” include these four deals – or about a third of the week’s calendar:

 

Chegg (CHGG – proposed) is a Santa Clara, California-based provider of online textbook rentals offering about 180,000 physical titles and 100,000 ebooks. The company also offers homework help and help to high school students in finding the right college and obtaining scholarships. Founded in 2005, Chegg has about 613 employees. Chegg plans to offer 15 million shares at $9.50 to $11.50 each to raise $75 million. The company plans to offer 14.4 million shares and selling shareholders plan to offer 600,000 shares. The IPO will be priced on Tuesday evening to start trading on Wednesday on the New York Stock Exchange. The joint-lead managers are: J.P. Morgan, BofA Merrill Lynch, and Jefferies. The co-managers are: Piper Jaffray, Raymond James and BMO Capital Markets.

 

 

Extended Stay America (STAY – proposed) is a Charlotte, North Carolina-based owner and operator of company-branded hotels in North America. The company owns and operates 682 hotel properties comprising about 75,900 rooms located in 44 states across the United States and in Canada. The company owns and operates 630 of its hotels under the core brand, Extended Stay America. It also owns and operates three Extended Stay Canada hotels, 49 hotels in the economy extended stay segment under the Crossland Economy Studios and Hometown Inn brands, and it manages two Extended Stay America hotels. Founded in 1995, Extended Stay has about 10,400 employees. Extended Stay plans to offer 28.3 million shares at $18 to $21 each to raise $550.9 million. The IPO will be priced on Tuesday evening to start trading on Wednesday on the New York Stock Exchange. The joint-lead managers are: Deutsche Bank Securities, Goldman Sachs and J.P. Morgan. The co-managers are: Citigroup, BofA Merrill Lynch, Barclays, Morgan Stanley, Macquarie Capital, Blackstone Capital Markets, Baird, Houlihan Lokey and Stifel.

 

 

Houghton Mifflin Harcourt (HMHC – proposed) is a Boston-based  provider of education solutions, delivering content, technology, services and media to more than 60 million students in over 150 countries worldwide. In the United States, the company believes it is the leading provider of K-12 educational content by market share. Its instructional materials are used in every school district within the United States. Founded in 1832, Houghton has about 3,300 employees. Houghton’s selling shareholders plan to offer 18.3 million shares at $14 to $16 each to raise $273.8 million. None of the proceeds will go to the company. The IPO will be priced on Wednesday evening to start trading on Thursday on the NASDAQ Global Select Market. The joint-lead managers are: Goldman Sachs and Morgan Stanley. The co-managers are: Citigroup, Credit Suisse, Wells Fargo Securities, Blackstone Capital Markets, BMO Capital Markets, Piper Jaffray, Stifel, CastleOak and Ramirez.

 

 

zulily (ZU – proposed) is a Seattle-based online retailer offering discount merchandise from thousands of vendors, including emerging brands and smaller boutiques, as well as larger national brands. “Millions of moms” are the target audience of zulily, which offers a fresh daily selection of clothes, shoes and other items for women and children – often in “flash sales” for a limited time only. Since its inception in 2009 through June 30, 2013, zulily has worked with over 10,000 brands, featured over 1.6 million product styles and sold over 42 million items to over 2.9 million customers. Founded in 2009, zulily has about 950 employees. zulily plans to offer 11.5 million shares at $16 to $18 each to raise $195.5 million. The IPO will be priced on Thursday evening to start trading on Friday on the NASDAQ Global Select Market. The joint-lead managers are: Goldman Sachs, BofA Merrill Lynch and Citigroup. The co-managers are: RBC Capital Markets, Allen & Company and William Blair.

 

Looking into next week, the IPO calendar has three names. They are expected to raise about $370 million. But those numbers could grow by the time that Monday, Nov. 18, rolls around.

 

 

Stay tuned.