The US initial public offering of a little wireless kit maker on Friday confirmed what everyone already knew: the IPO market is dead – or at least deadly dangerous.
Everyone knew this, except the lead underwriters of Ruckus Wireless – Goldman Sachs, Morgan Stanley and Deutsche bank. Read more
Those who argue for a further relaxation of the LSE’s listing rules may want to note the following announcement:
Rangers, the Scottish football club, today announces its intention to seek Admission to the AIM market of the London Stock Exchange. Read more
Update after the close: It closed green(shoe) at $38.23 according to Bloomberg data. But not until after a few moments close to $38.00, as seen below earlier…
The California State Teachers’ Retirement System, Calstrs, has called for Facebook to split the role of chairman and chief executive and to appoint a woman to its all-male board for the first time, the FT reports. Calstrs, one of the biggest US public pension funds, is already invested in Facebook through its private equity holdings, and will pick up shares through index-tracking after its IPO. Calstrs’ demand for shareholders to be given voting powers according to the size of their stake will be a tough request to meet, however. Facebook has revealing in filings that Mark Zuckerberg paid nominal sums to other shareholders in agreements to gain enormous voting clout, says NYT Dealbook. Read more
Caesars Entertainment, the casino chain carrying more than $22bn in debt, completed an initial public offering that gives the company a market value of $1.13bn, Bloomberg reports. Las Vegas-based Caesars, taken private in a $30.7bn buyout by Apollo Global Management and TPG Capital in 2008, raised $16.3m selling 1.81m shares at $9 each, the company said in a statement. The stock, which was offered for $8 to $10 apiece, will start trading on the Nasdaq Stock Market on Wednesday under the symbol CZR. The $16.3m raised is a fraction of what it was hoping to muster two years ago. Reuters says the deal is often referred to as an example of how the credit bubble that preceded the financial crisis of 2008 led to overleveraged deals that have left their private equity investors with a Herculean challenge of getting their money back. Caesars’ earnings before interest, tax, depreciation and amortization (EBITDA) were $1.8bn in the 12 months ending September 30 on interest expenses of $1.93bn, according to its IPO document.
Facebook already has so much cash, and so little desire for true shareholder control, that it should really call its IPO off instead of “gratifying” its venture capital backers and employees, the FT’s John Gapper writes in a must-read column. Investors have reacted warily to Facebook’s suggested $75bn-$100bn valuation of 100 times price to earnings, says Reuters. Google emerged on public markets in 2005 with a price 218 times its earnings, but was valued at $23bn at the time. Facebook’s price tag would make it worth 53 per cent of Google’s current valuation, despite the latter company earning 10 times the profit, notes the WSJ. Read more
Facebook launched the process for its highly anticipated stock market debut, filing papers for a $5bn initial public offering that will turn key shareholders into billionaires, most notably Mark Zuckerberg, the 27-year-old chief executive and co-founder, the FT reports. Mr Zuckerberg’s 28.4 per cent stake would give him a paper worth of $22.7bn, based on secondary market trading, valuing Facebook at $80bn. More striking is the absolute control Mr Zuckerberg will retain over the company. He and his close allies own 57 per cent of the company, guaranteeing that he will be able to run Facebook more like the mission-driven public trust he envisioned in his Harvard dorm room eight years ago than a public company beholden to investors. “Facebook exists to make the world more open and connected, and not just to build a company,” he wrote in a letter to investors in the filing. “Simply put: we don’t build services to make money; we make money to build better services.” Read more
Facebook’s filing on Wednesday is set to price its initial public offering at some $5bn, but could be increased in response to investor demand, IFR reports. Guiding the IPO will be David Ebersman, Facebook’s quiet but no-nonsense chief financial officer, says AllThingsD. “Facebook is not taking chances with this IPO and wants to make it a blue-chip event,” one source told AllThingsD. Ebersman has pushed to keep banks’ fees in the offering low. Read more
Sadly, the London Stock Exchange’s plan to fix the broken UK IPO market is unlikely to work for the simple reason that it doesn’t really believe there’s a problem. Read more
SuperDroop has closed below its 500p IPO price target for the first time on Tuesday, as the market continues to digest the recent sell note from Numis Securities.
Yelp, the online consumer review company, plans to launch an initial public offering worth up to $2bn, according the Wall Street Journal, citing sources close to the company. Hot on the heels of the successful IPO of deals site Groupon last week, Yelp has mandated Goldman Sachs and Citigroup to lead the offer as early as next year. The mid-August volatility closed the market for new IPOs but Groupon’s deal last week might have blazed the trail for further deals launched by internet companies. Established in 2004, Yelp was one of the “first companies to blend three areas that are driving much of the growth among consumer Internet firms: social networking, local commerce and mobile communications,” the WSJ said. Read more
Groupon will seek a valuation of no more than $12bn for its initial public offering, half the amount it originally wanted when the offering was first announced, the FT reports. The size of the float in the IPO has also been cut to roughly $500m from $750m, leaving less than 10 per cent of the company’s outstanding shares available to IPO investors, Reuters says. Groupon and its advisers have reduced the float partly to sell more stock later on at a higher price, and partly because current investors are now reluctant to sell their shares into the offering, according to the WSJ. The reduced offering follows a barrage of weak stock markets and concerns over the online coupon company’s business model, NYT Dealbook says. Read more
Barely six weeks after chief executive Jim French confirmed guidance and described forward tickets sales as encouraging, Flybe, the regional UK airline, has issued another profits warning.
Flybe’s press release: Read more
Pricewaterhouse Coopers and Renaissance Capital (in the usual place) do their best to add gloss to their third quarter overviews of the IPO market, but not enough to brighten a depressingly dark picture.
Start with Rencap, which tackles activity worldwide. The report starts out gloomy enough, noting that the third quarter was the quietest since Q3 2009 in issuance volume — and that’s with 87 per cent of the issuance coming in the first six weeks, before the August volatility spike. Read more
Facebook will debut on public markets later than planned, delaying offering plans from to late 2012 , people familiar with the company have told the FT. Facebook’s chief executive Mark Zuckerberg will wait until next September or later in order to remain focused upon developing products, the people said. The delay is reminiscent of Google’s long journey to IPO in 2004, FT Tech Hub says, and it is Google that is Facebook’s immediate challenge over the next two years, as the companies vie over products. Meanwhile, Groupon is planning to go public in October or November, having also delayed plans this year, NYT Dealbook reports. Read more
Carlyle Group has formally fired the starting gun on its plans to go public, with the private equity group filing registration documents for an initial public offering as early as the first half of 2012, the FT reports. The move follows the listing of competitor Apollo Global on the New York Stock Exchange in March, and will test the willingness of investors to back a sector that has a poor stock market record. Apollo shares are yet to trade above their listing price and are down more than a third since the group raised $565m from investors. Shareholders who took part in Blackstone’s $5bn initial public offering in 2007 have lost more than half their money. Carlyle, which is based in Washington, filed a registration statement with the US Securities and Exchange Commission for a proposed $100m IPO of its common units – an equity instrument similar to ordinary shares but without voting rights – by 2012. The provisional fundraising target listed in Tuesday’s filing is a token number for filing purposes that is likely to change over time. Read more
Groupon has called off its mid-September flotation in order to await better markets and to deal with regulators, according to Reuters. A roadshow for investors that had been scheduled for next week was cancelled with Groupon now reassessing its plans on a week by week basis, reports the WSJ. The company has drawn criticism for its use of unfamiliar accounting standards and for its business model, which relies on high marketing costs to achieve growth. US IPO listings have fallen by the wayside at the fastest rate since 2004 in recent months, Bloomberg says. Read more
The financial turmoil triggered by Europe’s debt crisis, the US credit rating downgrade and increasing concerns over global growth are causing companies to cancel or put off planned initial public offerings, reports the FT. “The primary markets are shut for now,” said Craig Coben, European head of equity capital markets at Bank of America Merrill Lynch. “This is not a good time to launch IPOs.” There have been about $134bn of IPOs so far this year but volatile equity markets will now make it difficult to beat last year’s $281bn total. Read more
The Wall Street Journal reports that American International Group (AIG) is looking to sell part of its giant airplane-leasing business through an initial public offering, according to people familiar with the matter. It is believed the sale of International Lease Finance Corp (ILFC) could raise between $1.5-2bn if market conditions are favorable, helping the company chip away at its government debt. The sale would represent roughly 25 per cent of Los Angeles-based ILFC and rank as one of the largest IPOs in the US so far this year, says the WSJ. AIG, which sold of its own stock in May, has been assessing strategic options for ILFC. The business is not seen as core to its business of selling insurance and had a book value of $8.2bn, representing its assets less liabilities, at the end of March. “Management has suggested a willingness to part with ILFC at the right price,” analysts from Bank of America Merrill Lynch noted in a research report last month. The insurer has considered selling all or part of the business, the WSJ cited people familiar with the matter. Read more
Meh!
The IPO research blackout on Glencore International has been lifted this Wednesday, which means the investment banks responsible for the UK’s latest IPO flop are now free to heap praise on the commodities trading house. Read more
Zynga, the social networking games developer closely tied to Facebook, is set to file for an IPO this week that hopes to value the company at up to $20bn, the FT reports. It is expected to raise as much as $2bn in the sale, based on a valuation of between $15bn and $20bn, according to people close to the deal. The IPO will be led by Morgan Stanley, along with Bank of America Merrill Lynch, Barclays, Goldman Sachs and JPMorgan, the people said. The Wall Street Journal says the Zynga IPO will test investors’ appetite internet companies. Several web-based firms have raised money at eye-popping valuations, recently. Read more
Carlyle, the private equity firm with $108bn under management, plans to raise more than $1bn with an initial public offering of stock but is likely to come to the market with a lower-than-expected valuation, according to bankers familiar with the matter, the FT reports. Carlyle this month selected Citigroup, Credit Suisse and JPMorgan Chase to lead the offer. Generally, firms file their registration statements within two or three months of selecting bankers, which suggests that Carlyle could list as soon as September if market conditions allow. A spokesman for Carlyle declined to comment. The bankers familiar with the matter said recent stock market weakness meant Carlyle would have to accept a lower price for its listing on the New York Stock Exchange than could have been secured earlier this year. Carlyle had hoped to be valued at almost 10 times its “economic net income”, a metric that excludes costs associated with the listing, they said. Now, Carlyle can expect a multiple of about seven times unless market conditions improve, they added. Read more
Oaktree Capital, an alternative asset manager with $85.7bn in assets, has filed to list its shares on the New York Stock Exchange in a move that is expected to value the group at between $8bn-$9bn, reports the FT. Oaktree’s listing would follow that of Apollo, another alternative asset manager. Rival Carlyle is also expected to go public in coming months. The filing on Friday showed that Oaktree’s two founders, Howard Marks and Bruce Karsh, each own 15% of the firm. While most such firms have increased assets under management ahead of a public listing, Oaktree has been returning money to investors, citing the lack of opportunities in the distressed debt markets. Among risk factors included in its filing is the firm’s tendency to limit assets under management to achieve better returns, a discipline its traditional investors love but which may limit fees that public investors value. DealBook adds that Goldman Sachs and Morgan Stanley will underwrite the IPO. Read more
Bill Ackman is considering launching an IPO of a new fund to raise as much as $3bn in permanent capital for investments, the FT says. The activist investor, whose hedge fund Pershing Square has $10bn under management, laid out his desire for a reliable source of capital in a letter sent to investors on May 25. Finalternatives adds that the Ackman is currently in talks with investors about a closed-end permanent capital vehicle, although nothing has been finalized. The activist firm could list a fund by the end of this year, although an early 2012 listing is also possible. DealBook notes that so-called ‘sticky money’ or permanent capital has become a hedge fund obsession in recent years. Read more
Italian fashion house Prada raised $2.1bn in a Hong Kong IPO on Friday, about a fifth lower than initially sought, as risk aversion weighed on the deal, reports Reuters. The Milan-based company priced its IPO at HK$39.50 a share, the bottom of a revised indicative price range issued on Thursday, according to three sources with direct knowledge of the deal. Prada had originally targeted garnering up to $2.6bn. The lower-than expected raising comes a day after luggage maker Samsonite International fell about 8% in its HK trading debut. Despite the glamour around Prada’s IPO, increased volatility in global markets and Samsonite’s poor debut weighed on the offering, with Prada cutting the mid-point of its IPO on Thursday. BeyondBrics asks whether the timing of Prada’s HK IPO could have been any worse. Read more
Samsonite shares closed nearly 8% lower on their first day of trading in Hong Kong on Thursday, despite being priced at the bottom end of revised price guidance, reports the FT. The disappointing debut by the US luggage maker could hurt plans by other western brands to tap the Hong Kong stock market for capital and came as Italian luxury brand Prada lowered the top amount it was seeking to raise there and, according to Bloomberg, priced its IPO below the middle of its marketed range. Samsonite’s stock opened at HK$13 on Thursday, 10.3% lower than its listing price of HK$14.50. It closed at HK$13.38, 7.7% lower, against a 1.75% fall in the benchmark Hang Seng index. The timing of the listing was considered a key factor in the stock’s first-day performance. The Hang Seng index, down 7.3% this month, has suffered from a combination of eurozone woes, bearish sentiment on Wall Street and fears of China’s property bubble bursting. The company raised HK$9.73bn on Friday after pricing its IPO at a 2011 earnings multiple of 18.3 times, compared with 22 times at the top of the original indicative price range. Read more
“World’s biggest IPO”. “Unquantifably unique”. “No natural like-for-like”. “A trading house like no other”.
Whatever. Read more
A glitzy roadshow last week in Hong Kong ahead of Prada’s planned HK$20.31bn ($2.63bn) initial public offering on June 24 failed to impress fund managers, who expressed doubts over a price-earnings ratio of as much as 27 times valuation for the Italian fashion house – at least 20% ahead of its nearest rival Burberry, reports the FT. Fund managers in particular noted that Prada comes in at 18 times the p/e of LVMH, the world’s largest luxury brand, and that it is competing in an increasingly crowded market. Christfund Securities research said the China luxury consumption story might not be enough to overcome the eye-watering valuation. The WSJ says that as sentiment toward some IPOs in Hong Kong begins to sour, Prada’s IPO and those of other retailers betting on growing Chinese demand will be closely watched. Read more
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