BJ’S SPONSORS RUSH TO THE EXITS0RIVATEûEQUITYûlRMû#6#û#APITALû0ARTNERSûANDû
,EONARDû'REENûû0ARTNERSûOFmOADEDûMû
BJ’S WHOLESALE CLUB shares, or 13% of the
company, to Goldman Sachs via a block trade
last week.
Goldman re-offered the shares at
US$24.65 each, the bottom of a
US$24.65-US$24.74 range and a tight 0.4%
discount to the US$24.74 close.
The shares stumbled in Thursday’s
aftermarket, opening at US$24.40 and
closing at US$24.35, both below the offering
price.
“The pricing is kind of stupid in terms of
how tight it is but people were expecting it,”
a hedge fund manager said, suggesting the
BANKûSTRUGGLEDûTOûFULLYûOFmOADûITSûEXPOSURE
As with the last BJ’s block sell-down in
March, the sponsors let more stock go below
THEû53ûLEVELûSETûONû"*SûlRSTûFOLLOW
ONû
in December.
After a lengthily holding period, the
sponsors appear eager to make a full exit as
soon as possible. If the price is right, they
could look to sell their remaining 20m
shares (7.2% each) in early July after a 30-day
lock-up expires.
BJ’s went public at US$17.00 a share in the
middle of last year, its solid performance
surprising some that see the company as a
shadow of its bigger rival Costco.
The March block saw Bank of America
Merrill Lynch buy 17m shares from the
same sellers at US$24.58 each.
Goldman Sachs also bought a block of 3.3m
FRESHPET shares or 9.2% of the company from
exiting sponsor MidOcean Partners,
reoffering the stub holding at US$46.89, the
TOPûOFûAû53
ûRANGEûANDûmATûTOû
the close.
4HEûLACKûOFûAûDISCOUNTûREmECTEDûTHEû
complete removal of the sponsor overhang,
and proved a tailwind for the share price,
which jumped above US$48.00 in
Thursday’s aftermarket.
With the US$155m sale of its remaining
9.2% stake, the New York-based MidOcean
has now made a full exit from its best-
KNOWNûINVESTMENT ûHAVINGûlRSTûPUTûSOMEû
cash behind Freshpet in December 2010
before taking it public in November 2014 at
US$15.00 a share.
AVALARA’S FOLLOW-ON DELAY WORTH
THE WAIT
(IGH
mYINGûSALESûTAXûCOMPLIANCEûSOFTWAREû
provider AVALARA scored one of the strongest
outcomes of the week in ECM, raising nearly
US$250m of primary capital to add to its
cash pile.
Even after a late 20% increase in size to
3.6m shares (about 5% of Avalara’s expanded
capital base), the two-day marketed offering
was seven times oversubscribed, much
higher than the two to three times level
more typically seen on US follow-ons and
REmECTEDûINûTHEûEQUALLYûRAREûûlLE
TO
OFFERû
premium.
Goldman Sachs, Bank of America Merrill Lynch
and Morgan Stanley led the offering.
The top 10 accounts took 60% of the deal
and the top 25 got 85%, according to a
banker close to the deal.
The tight book ensured the stock opened
up at US$70.30 in Thursday’s aftermarket,
comfortably above the US$69.40 offering
price set late on Wednesday.
Though the stock seemed to stutter mid-
SESSION û!VALARAûlNISHEDûIMPRESSIVELYûATû
US$72.75.
The outcome was all the more impressive
since volumes in Avalara have been elevated
in the past month as major shareholders
Sageview Capital and Warburg Pincus sold
about 10m shares on-market rather than
wait to participate in the follow-on.
This insider selling was remarkably well-
absorbed, though it may explain why the
price came back a little in recent weeks
from a record high of US$74.90 on May 7.
Volumes in Avalara average about 900,000
shares a day but there were some much
bigger days in May, including 4m on May 8,
3.5m on May 24 and 2.9m on May 20, not
that much less than the 5.3m shares traded
on Thursday in the wake of the liquidity
event.
Avalara went public at US$24.00 a year
AGOûANDûlLEDûCONlDENTIALLYûFORûAûlRST
TIMEû
follow-on in September.
4HATûlLINGûONLYûPUBLICLYûAVAILABLEûLASTû
week) envisaged a primary and secondary
offering but after a long delay – probably
due to the market sell-off in the fourth
quarter of last year – the offering launched
in the past week was all-primary.
Sageview and Warburg Pincus together
still own about 19.5m Avalara shares or
about 28% of the company.
I3 VERTICALS, a 2018 payments software IPO
that came and went with little fanfare, priced
Aû53MûTWO
DAYûMARKETEDûlRST
TIMEû
follow-on that took advantage of the stock’s
solid gain from its US$13.00 IPO price set last
June to as high as US$27.88 just last week.
The offering of 4.5m shares priced at
53ûORûAûûlLE
TO
OFFERûDISCOUNT û
with three-quarters of the proceeds heading
to selling insiders.
4HEûOFFERINGûWASûSIGNIlCANTLYû
oversubscribed with support from both new
and existing shareholders. The top 25 accounts
took 90% of the stock, a banker on the deal said.
!ûDRAFTûlLINGûWASûLOBBEDûCONlDENTIALLYûONû
May 20, a week after the company reported
its latest quarterly numbers and maintained
its 2019 guidance for adjusted earnings pershare of 85–90 cents. That guidance was
revised up alongside the April close of the
company’s US$24m New Data acquisition.
The smaller primary proceeds will add to
the company’s dry powder for acquisitions.
“They see continued M&A out there and
this company is still small enough that it is
EASIERûTOûlNDûANûACCRETIVEûACQUISITION vûTHEû
banker said.
Founded in 2012, i3 Verticals delivers
integrated payment and software to SMBs
ANDûORGANISATIONSûINûSPECIlCûVERTICALSûSUCHû
as education and healthcare.
Cowen, Raymond James and Bank of America
Merrill Lynch and KeyBanc Capital Markets are
leading the offering, with BAML the new
addition to the original IPO syndicate.VERRA MOBILITY TRANSITIONS SPAC
REGISTRYVERRA MOBILITY, a provider of toll
management technologies acquired last
June by former SPAC Gores Holdings II,
made its capital markets debut on
Wednesday through a 15m-share all-
secondary stock sale.
The offering, marketed over two days,
saw former Gores sponsor Platinum Equity
Capital Partners reduce its stake from 35.5%
to 26%, with a further sell-down to 24.6%
possible through the greenshoe.
Deutsche Bank, a bookrunner on Gores’ IPO
in 2017 and adviser on its US$2.25bn
ACQUISITIONûOFû6ERRA ûHEADEDûAûlVE
STRONGû
underwriting syndicate in the placement of
AûFULLYûSIZEDûDEALûATû53 ûAûûlLE
TO
offer discount.
Verra closed Thursday’s session at US$12.53.
With just 10 shareholders, including
Platinum, holding a 71.7% stake, the
exercise here was to broaden the company’s
registry and the 15m shares sold
represented 25 days’ trading volume.
Verra got a lift in March from New York
City’s decision to expand the school safety
programme from about 140 school zones to
750 schools. While expecting
implementations to positively impact on
revenue “in the second half”, management
held the line on full-year 2019 guidance of
adjusted Ebitda of US$235m–$240m and
revenue of US$428m–$436m, versus
$197.6m and $370.1m in 2018.
Verra closed Thursday’s session at
US$13.80, up 41.4% for the year.NORTHWEST BOOSTS BALANCE SHEET,
MARKET PROFILEGas and water utility NORTHWEST NATURAL
raised US$83.8m of gross proceeds from an
overnight stock sale late on Tuesday to
bolster its balance sheet and repay short-
term debt.EQUITIES AMERICAS