JP Morgan, RBC Capital Markets and Wells
Fargo priced 1.25m Northwest shares, or 4%
of the utility’s expanded capital, at US$67.00
each, towards the upper end of the US$66-
$67.30 marketing range and a 4.4% discount
to the stock’s US$70.09 prior close.
In Wednesday’s aftermarket, the shares
fell to US$67.00, in line with the offering
price.
Northwest Natural distributes natural gas
through 750,000 meters in Oregon and
southwest Washington, but has also been
making a series of small acquisitions in
water and wastewater requiring an
investment of about US$70m.
Though under-owned relative to power
and gas utilities, water utilities have become
a more familiar presence in US ECM in the
past six months or so as companies such as
Aqua America and SJW have tapped
investors for cash.
The offering proceeds are being used to
make equity contributions to the company’s
utility subsidiaries and pay down some debt,
and come as utilities stocks have
outperformed the broader market in the
second quarter as long-term interest rates
have tumbled.
SIENTRA FUNDS MAKEOVER WITH EQUITYEmbattled breast implant manufacturer
SIENTRA has new life after raising US$100m
in an upsized follow-on offering that
REMOVEDûAûlNANCINGûOVERHANGûONûITSûSTOCK
3IENTRAûlLEDûAûREGISTRATIONûSTATEMENTûONû
May 8, leading to a 30%-plus sell-off in its
shares on expectations of a deal.
Stifel, William Blair and SVB LeerinkûBENElTEDû
from strong reverse inquiry before launching
a one-day marketed follow-on offering at
US$75m after the close on Monday.
They placed 17.4m shares, a little more
than 20-days’ volume, at US$5.75 each, a
ûlLE
TO
OFFERûPREMIUMûANDûINCREASINGû
the offering size to US$100m.
Sientra closed Tuesday’s session at US$6.60,
well off the US$26.79 annual high late last
year but marking a 15% return from offer.
The equity recap represents a new start
for the company.
Sientra came under pressure after the SEC
brought fraud charges against company
founder and former CEO Hani Zeini in
September.
The SEC charges stemmed from
contamination in the manufacture of breast
implants in 2015.
Sientra raised US$66m from a follow-on
stock offering that September. The SEC
alleged that Zeini concealed knowledge of
manufacturing problems.
Zeini resigned in late 2015.
Sientra revamped its manufacturing
processes but has still managed to run afoul
of regulators.In March, the FDA issued the company a
warning letter for failing to comply with
post-approval study requirements for its
breast implants.
The regulator had already warned doctors
that the type of breast implant made by
Sientra has been linked to cancer.
The implants, called textured implants,
have been banned in some European
countries.
The FDA has not banned the sale of
textured implants. Instead, it is considering
mandating a “black box warning” that
informs patients of potential health risks.
For all of the controversy surrounding the
COMPANY û3IENTRAûPOSTEDûlRST
QUARTERû
revenues of US$17.6m, a 14% increase in
breast implant sales over 2018.
Sientra is using proceeds from the
offering to fund the sales and marketing of
its breast implants and other products.ORCHARD THERAPEUTICS COMPLETES
FIRST FOLLOW-ONGene therapy specialist ORCHARD THERAPEUTICS
walked into the buzzsaw of post-IPO market
EXPOSUREûWHILEûMARKETINGûITSûlRSTûFOLLOW
ONû
as a publicly traded company.
The stock plunged 22% after two days of
marketing nearly 10% of the company.
JP Morgan, Goldman Sachs, Cowen and
Barclays were more than twice covered asRevolve IPO makes fashionable debut
US Solid growth, profits and discount overshadow China worriesOnline fashion retailer REVOLVE’s combination
of consistent growth and profitability - and an
unusually strong connection with millennial/
Generation Z consumers - helped ensure the
company delivered a strong NYSE debut Friday.
After pricing its IPO at US$18.00 or the top
of the range to raise nearly US$212m, mostly for
selling insiders, the shares opened at US$25.16
to deliver an immediate gain of 40%.
An underwriting syndicate led by Morgan
Stanley, Credit Suisse, Bank of America Merrill
Lynch earlier drew heavy oversubscription and
saw limited price sensitivity for the 11.8m shares
offered.
Strong results from comp Stitch Fix on the eve
of pricing may also have aided marketing efforts.
Though Revolve did not wow IPO investors
quite like 2019 stars such as Beyond Meat and
Zoom Video Communications, Revolve arguably
offered something even rarer among this year’s
crop of high-flying IPOs.
“The company is growing essentially its top-
line north of 20% and has a history of being
consistently profitable, and that’s somethingwe have not seen too often,” one hedge fund
manager said.
The IPO valued Revolve north of 15 times
2020 EV-to-Ebitda, below the 20-plus average
of a comp set that includes Stitch Fix and several
European retailers with similar business models.
Differentiating itself from many of this year’s
growth IPOs, Revolve has previously taken only
US$15m of outside capital - from consumer retail
specialist sponsor TSG Consumer Partners in
2012 - and has been profitable in 15 of its 16 years
in operation.
The company generated net income of
US$30.3m on sales of US$522.8m in the 12
months ended March 31, 2019.MILLENNIALS
Investors liked the fact that Revolve has
succeeded in getting fickle millennials to pay
full price (or 95% of the full retail price) for 79%
of its net sales, extraordinary in a retail fashion
industry awash with discounted product.
The company was one of the first fashion
retailers to have mastered the use of Instagraminfluencers to sell fashion at scale, one banker
close to the deal said.
Revolve’s strongest quarter is the second quarter
rather than the holiday quarter because it generates
increased sales in the lead-up to April’s Coachella
festival, where it sponsors its own event.
Revolve initially hoped to go public in the
final quarter of last year but delayed the deal as
markets swooned and then waited until after the
Coachella event to try again.
The main source of pushback was the company’s
China exposure, the hedge fund manager said.
Revolve uses mainly Chinese suppliers,
leaving it exposed to the current US/China trade
ructions that have already seen tariffs increased
for Chinese products such as handbags and
makeup and potentially for apparel and shoes.
However, the consensus among analysts at
the underwriting banks is that the worst-case
scenario is about 300 basis points of margin
pressure (gross margins were 53.2% last year)
and many of its competitors would have to deal
with the same issue as well.
Anthony Hughes