The IPO Buzz: Steady IPO Ship in Rocky Seas

Against the backdrop of a volatile stock market, an IPO calendar of 16 deals is emerging. They aim to raise nearly $4 billion in the coming weeks, depending upon market conditions.

Speaking of volatility, it looks like uncharted territory. Veteran investment professionals don’t recall a time before now with triple-digit daily fluctuations – up or down – of the U.S. stock market, as measured by the Dow Jones Industrial Average. In the 39 trading days from the beginning of August, on Monday, Aug. 3, through Friday’s close on Sept. 25, the Dow finished the day 23 times with a triple-digit swing from its previous close. And some of those swings were significant. The largest “UP day” was Wednesday, Aug. 26, when the Dow popped for a gain of 619.07 points. The sharpest “DOWN day” was Monday, Aug.24, when the Dow sank with a loss of 588.40 points.

Worth repeating: In 23 of the last 39 trading days, the Dow ended the day with a triple-digit swing from its previous close.

You may be wondering: Just what is the market telling us? The pros are just as puzzled. The incoming tide will bring the answer. But in the meantime, Wall Street is giving us an IPO calendar.

Eight with a Date

This week’s calendar shows eight deals looking to raise over $1.3 billion, and four more could be added, if their investment bankers are willing to commit to a pricing date.  Nevertheless, not all are true IPOs.

Two are public offerings representing ordinary shares already traded on foreign stock exchanges (non-U.S.) that are being rolled into American Depositary Shares for a U.S. offering. Any investor can buy shares ahead of the ADS’s pricing date. The two are Oasmia Pharmaceutical and Strongbridge Biopharma.

The other is a “best efforts” deal. In this type of offering, the investment bankers will make every effort to place shares with investors. What shares are unsold remain unsold. The bankers will not buy them, assuming no risk. In a firm commitment offering, the bankers buy the entire offering from the issuer and take full responsibility in selling the shares. If the bankers cannot find buyers, then THEY own all unsold shares. That is risky. The “best effort” deal is Fuling Global.

Cancer Rx, Food and Surgery

Let’s take a look at the three largest deals on this week’s calendar.

NovoCure (NVCR – proposed), based in St. Helier, Jersey, on one of the English Channel Islands, is a commercial-stage oncology company developing a novel proprietary therapy called TTFields to treat solid tumor cancers. TTFields is a low-toxicity anti-mitotic treatment that uses low intensity, intermediate frequency, alternating electric fields to exert physical forces on key molecules inside cancer cells. TTFields therapy disrupts normal cell division, leading to the death of cancer cells. Founded in 2000, the company has about 258 employees. Bankers expect to offer 12.5 million shares at $26 to $29 each to raise $343.8 million. The shares are expected to trade on The NASDAQ Global Market on Friday morning, Oct. 2, 2015.

(For more information, please click here: NovoCure)

Performance Food Group (PFGC – proposed), based in Richmond, Virginia, believes it is the third-largest food-service distributor in the United States. The company markets and distributes about 150,000 food and food-related products from 68 distribution centers to over 150,000 customer locations across the country, according to the prospectus. Performance Food Group’s customers range from independent and chain restaurants to schools, business and industry locations, hospitals, vending distributors, office coffee service distributors, big box retailers and theaters. Founded in 2000, the company has more than 12,000 employees working for Performance Foodservice, PFG Customized, and Vistar. Bankers expect to offer 14.5 million shares at $22 to $25 each to raise $340.8 million. The shares are expected to trade on The New York Stock Exchange on Thursday morning, Oct. 1, 2015.

(For more information, please click here: Performance Food Group)

Surgery Partners (SGRY – proposed), based in Nashville, is a health-care services company providing solutions for surgical and related ancillary care in support of its patients and physicians. The company owns and operates, mostly in partnership with physicians, a portfolio of 99 surgical facilities, comprised of 94 ambulatory surgery centers and five surgical hospitals across 28 states. In 2014, over 4,000 physicians provided services to over 500,000 patients in its facilities. Founded in 2000, the company has about 5,200 employees. Bankers expect to offer 14.29 million shares at $23 to $26 each to raise $350 million. The shares are expected to trade on The NASDAQ Global Market on Thursday morning, Oct. 1, 2015.

(For more information, please click here: Surgery Partners)

At press time, there were four IPOs on next week’s calendar looking to raise $2.6 billion. But it is early – and anything can happen.

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 opinions.