The IPO Buzz: Second Time at Bat

Bats Global Markets (BATS – proposed), the fintech operator of an electronic stock exchange, plans to price its IPO this week. This isn’t the first time at bat for Bats.

Back on the evening of Thursday, March 22, 2012, BATS Global Market (the old name featured all caps – now it’s Bats Global Markets) priced its IPO of 6.3 million shares at $16 each. The deal was scheduled to trade on its own stock exchange the next morning, on Friday, March 23, 2012. It did – and that was when the trouble started.

There was a delayed opening due to what the financial media reported as a “glitch.” The BATS IPO finally opened shortly before 11 a.m. at $15.25 per share, DOWN 75 cents from its IPO price. It reportedly traded a few seconds before trading was stopped due to “technical issues.” Those technical issues were never fully resolved and, by the end of the day, the IPO was cancelled. As a result, all trades were wiped off the books. The upshot: No runs, no hits, no errors and on to the future.

Once in a blue moon, an IPO gets priced, trades and is canceled. When this happens, all trades are canceled because money does not change hands until the settlement date a few days later. The last time this happened was the BATS IPO in March 2012.

Bats Global 2016 Vs. BATS 2012

Let’s take a look at the company.

Bats Global is a Lenexa, Kansas-based electronic securities exchange. It was formed as an alternative to the NYSE and the Nasdaq. The company believes it is the second-largest exchange operator in equities, the largest exchange operator of exchange-traded funds (ETFs) in terms of market share, and the largest European exchange operator in terms of value traded as of Dec. 31, 2015, according to the prospectus. During 2015, Bats Global ran the fastest-growing U.S. market for exchange-traded options in terms of market share, the prospectus said.

The BATS of 2012 was hardly any slacker. It had some interesting numbers. For the year ended Dec. 31, 2011, (remember this was in March 2012) BATS reported net income of $23.5 million ($1.29 EPS) on revenues of $926.6 million, UP from net income of $19.8 million ($1.11 EPS) on revenues of $834.8 million a year earlier. BATS Global 2012 had about 170 employees for the year ended 2011.

Fast forward to 2016 – Bats Global has some interesting numbers to report. For the year ended Dec. 31, 2015, BATS reported net income of $82.2 million ($2.53 EPS) on revenues of $1.78 billion, UP from net income of $49.2 million ($1.56 EPS) on revenues of $1.46 billion a year earlier. Bats 2016 had about 286 employees for the year ended 2015.

Bankers expect to price 11.2 million shares at $17 to $19 each on Thursday evening to trade Friday morning on the Bats BXZ Exchange.

A Shift at the SEC Window

On Friday, there was a very unusual move from the U.S. Securities and Exchange Commission. Its filing window posted expected pricing terms for two companies looking to go public. Such a move has been – until now – generally reserved for a Monday morning.

Maybe there is a shift in the wind for the IPO market?

Nevertheless, the names were: American Renal Associates Holdings (ARA – proposed) and MGM Growth Properties LLC (MGP – proposed).

American Renal Associates Holdings is a Beverly, Massachusetts-based health-care provider that owns and operates kidney dialysis facilities. The company partners with about 350 local nephrologists to develop, own and operate dialysis clinics. The company gives physicians clinical autonomy and operational support, along with hiring and retaining staff and providing practice-management services.

Late Friday afternoon, April 8, 2016, American Renal filed to offer 7.5 million shares at $20 to $23 each. The deal is expected to be priced Wednesday, April 20, 2016, to trade Thursday, April 21, 2016.

MGM Growth Properties LLC is a Las Vegas-based real estate investment trust (REIT) newly formed to acquire, own and lease entertainment and leisure resorts, including casino gaming, hotel, convention, dining, retail and entertainment properties.

Late Friday afternoon, MGM filed to offer 50 million shares at $18 to $21 each. The deal is expected to be priced Tuesday, April 19, 2016, to trade Wednesday, April 20, 2016.

Looking into the week of April 18, 2016, the IPO calendar now has two deals expecting to raise about $1.14 billion. But anything can happen on Monday morning, April 11.

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.