Trader Talk

Pisani: The IPO market is finally heating up

The IPO market is finally heating up. I've said that before only to be disappointed, but this time the calendar really is starting to fill up. Right now we have 12 deals in the pipeline, according to Renaissance Capital, which manages the Renaissance Capital ETF, a basket of recent IPOs.

The first significant IPO of the year should price tonight — Keane Group is a pure play on the oil and gas fracking business. They are players in all the right places — the Permian, Marcellus, Utica, Bakken. Like everyone else in this space, its revenue declined in 2015 and 2016. But OPEC cut output recently, and as prices have firmed, there's hope that business will be improving. They're looking to raise more than $400 million: 22.3 million shares between $17 to $19, up from 16.7 million shares earlier in the week.

There's more coming. With trading so strong, the market is starved for deals. There's lots of pent-up demand. Seven companies filed this Tuesday alone. Keane will be joined by Jagged Peak Energy, an oil and gas E&P that will be the biggest IPO of the year so far, valued at nearly $700 million. JELD-WEN Holding, a global manufacturer of windows, doors and treated composite trim and panels, launched a $550 million IPO — this is a play on the construction business. Laureate Education, the largest for-profit higher education company, announced terms for its IPO on Wednesday, but for-profit is a tough sell given how poorly they have performed.

We'll also have our first tech unicorn of the year, App Dynamics, which analyzes customers' business-critical software applications, seeking to raise $132 million with a market cap of $1.7 billion. That's a very low float, a favorite strategy of many tech firms seeking to go public. The strategy: restricting supply helps to create a spike on the first trading day.

It's not all great news... retailers are continuing to have problems. Claire's, which sells jewelry and accessories for young women and teens, withdrew its plans for an initial public offering on Tuesday. They follow in the path of Neiman Marcus, which also pulled its IPO. It's a tough situation: retailers need to raise capital, but the retail business is not good.

Still the overall direction is positive. Right now we have two big energy names in the pipeline, a tech unicorn, a construction-related company, and seven or eight smaller companies, mostly biotech. Not a bad start!