The IPO Buzz: Open for Business

In case you missed it, the 2017 season opener for the IPO market happened last week.

On Thursday evening, Jan. 12, Gores Holdings II (GSHTU) priced 37.5 million units at $10 each – in the first IPO of 2017. Gores Holdings II opened Friday morning at $10.16 on the NASDAQ and closed at $10.25 – UP 2.5 percent from its IPO price.

Gores Holdings II is a special purpose acquisition company (SPAC) or “blank check” company formed to bring about a merger, a capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Gores II believes it is positioned “to generate attractive acquisition opportunities,” the prospectus said. Chairman Alec Gores has more than 35 years of experience as an entrepreneur, operator and private equity investor. He and his team have invested in more than 100 portfolio companies since the 1980s. Their deals include The Learning Company, a carve-out from Mattel, and Hostess Brands, the maker of Twinkies, in an acquisition completed in November 2016 by Gores Holdings Inc. (Gores I).

Worth noting: The IPO market opened this year pretty much on time when compared with past years. (For more data, please check out “The IPO Buzz” published on Jan. 8, 2017.)

Another SPAC Plus A FRAC

Now we turn the page to this week and we find two IPOs looking to raise $435.6 million. Those names are FinTech Acquisition Corp. II (FNTEU – proposed) and Keane Group (FRAC – proposed).

FinTech is a Philadelphia-based special purpose acquisition company (SPAC). This SPAC – or “blank check” company – expects to offer 13.5 million units at $10 each on Thursday evening to trade Friday morning on the NASDAQ.

The company intends to concentrate on identifying businesses providing technological services to the financial services industry, with particular emphasis on businesses that supply data processing, storage and transmission services, data bases and payment-processing services. FinTech may, however, pursue acquisitions outside the financial technology industry, the prospectus says.

Keane Group is a Houston-based pure-play provider of integrated well completion services in the United States. The company expects to offer 16.7 million shares at $17 to $19 each on Thursday evening to trade Friday morning.

Note: Keane Group is one of the unicorns. It has a proposed market capitalization of $1.85 billion. (A unicorn is the financial term for any privately owned company with a market capitalization of $1 billion or more.)

Keane Group’s primary service is offering horizontal and vertical fracturing – also known as “fracking” – as well as wireline perforation, logging, engineered solutions and other value-added services.

The company has about 944,250 hydraulic horsepower spread across 23 hydraulic fracturing fleets and 23 wireline trucks in the Permian Basin, the Marcellus Shale/Utica Shale, the SCOOP/STACK Formation, the Bakken Formation and other active oil and gas basins.

For the nine-month period ending Sept. 30, 2016, Keane reported a loss of $148.6 million on revenues of $269.5 million versus a loss of $38.9 million on revenues of $312.2 million for the same period a year ago.

Unicorn Sighting

Looking into the week of Jan. 23, 2017, the IPO Calendar has just one deal – AppDynamics (APPO – proposed) – another unicorn. AppDynamics has a proposed market capitalization of $1.38 billion.

But anything can happen on Tuesday morning, Jan. 17, 2017, when the SEC’s filing window opens for business after the long holiday weekend. The U.S. stock market is closed on Monday for the federal holiday in observance of the birthday of slain civil rights leader Martin Luther King, Jr.

Stay tuned.

Disclosure: Neither the author nor anyone else on the staff has a position in any stocks mentioned, nor do we trade or invest in IPOs. The author and staff do not issue advice, recommendations or opinion.