Trader Talk

IPO turnaround: Here are the latest companies looking to go public

Jeff Lawson, (C) Founder, CEO, & Chairman of Communications software provider Twilio Inc., rings the opening bell to celebrate his company's IPO at the New York Stock Exchange in New York City, June 23, 2016.
Brendan McDermid | Reuters

Brexit may have slowed global markets, but the initial public offering (IPO) business is continuing to recover. May had a measly 8 filings, but a flurry of filings at the end of last week brought the June total to 17. We already have two for July.

On Monday, Japanese messaging app Line increased the price range of its IPO, the first IPO of the year to do so. It will be the biggest IPO of the year when it begins trading in the U.S. next Thursday.

The price talk is now 35 million shares at 2,900 to 3,300 yen, or about $30.50 at the midpoint, up from 2,700 to 3,200 yen.

That is a billion-dollar IPO, folks.

The road show is reportedly going very well, and there is talk the book could close as early as today. One unusual aspect of the Line IPO: the procedure follows Japanese rules. So it will be pricing Monday night, but not trading in the U.S. until Thursday, and not trading in Tokyo until Friday (this is a dual listing). That means it will not trade until three days after it prices, which introduces significant price risk for the IPO — but those are the rules.

Line is getting all the attention, but there are plenty of other IPO players entering the game. Yesterday AdvancePierre Foods Holdings, a major food manufacturer, announced terms and will likely begin trading next Friday at the New York Stock Exchange under the symbol "APFH."

It's a substantial offering: 18.6 million shares at $20 to $23, which is a $400 million IPO at the midpoint (the average IPO is roughly $100 million). This is an Oaktree Capital-backed leveraged buyout, created when Oaktree merged Pierre Foods and Advance Brands in 2010.

Several well-known consumer names have filed recently. Last Friday, Yeti Holdings filed to raise up to $100 million. Yeti makes coolers and outdoor gear. Don't laugh: It had sales of $608 million for the year ending March 31. That's a lot of coolers.

Acushnet, which makes Titleist golf balls and other golf equipment, filed for a $100 million IPO that will likely be increased. It booked $1.5 billion in sales for the 12 months ended March 31.

After Twilio's blowout debut, French-based data integration platform Talend filed last week. It simplifies the process of aggregating multiple data sets for analysis. Competitors include Informatica and Tibco, as well as more traditional enterprise software vendors like IBM, Microsoft, Oracle and SAP. Customers include AOL, Citi, GE Healthcare, Groupon, Lenovo, Orange, Sky and Sony. Silver Lake is a backer.

There's a surprising lack of small biotech IPOs among the recent filings, but there was a filing from Medpace Holdings, a contract research organization that provides research services to the pharmaceutical and biotech industries.

Finally, here's a surprise: Centennial Resource, an oil and gas exploration and production (E&P) company based in the Permian Basin, has filed for a $100 million IPO. You can see the effect the oil collapse has had on these small E&Ps: revenue went from from $24.1 million in the first quarter of 2015 to $15 million in the first quarter 2016. Sales are small, but just the fact that we have an E&P IPO is a sure sign some of the deer-in-the-headlight fear that gripped the oil markets in the early part of the year has let up a bit.

This is the first energy IPO since Sunrun in August, 2015, but that was a solar company. Green Plain Partners, another MLP, this one for ethanol, was in June of last year. There were a few midstream (pipes) IPOs around this time, as well.

You have to go back to August 2014 when Independence Contract Drilling, which provides rigs for E&Ps in the Permian Basin, went public. That's the last driller or E&P company that went public.

Bottom line: There hasn't been an E&P-related IPO in almost two years!