IFR Magazine – June 08, 2019

STOKE STRUTS OUT IPO

STOKE THERAPEUTICS is seeking up to US$107m
of IPO funding for its new approach to
treating a rare form of epilepsy and other
inherited diseases.
JP Morgan, Cowen and Credit Suisse launched
marketing of 6.7m shares at US$14-$16 each
on Friday for pricing on June 18.
Taking a page from cancer’s personalised
MEDICINEûlELD û3TOKEûINCORPORATESûGENETICû
testing into developing its treatments for
rare, inherited diseases.
Using its Targeted Augmentation of
Nuclear Gene Output platform, or TANGO,
Stoke is designing medicines to regulate the
expression of disease-causing proteins in the
patient.
4HEûlRSTûDRUGûISûAûTREATMENTûFORû$RAVETû
Syndrome, a severe form of epilepsy. Stoke
applied for an orphan drug designation in May
and expects to initiate a Phase I/II trial in H120.
Tango has raised US$130m from two
lNANCINGûROUNDSûWITHûINVESTORSûINCLUDINGû
Apple Tree Partners, RTW Investments, RA
Capital, Cormorant Asset management and
Perceptive Advisors.
It raised US$90m in October at US$8.93 in
a deal that was anchored by Apple Tree, the
company’s largest shareholder with a 65%
pre-offer stake.

HAYMAKER PUNCHES ABOVE-WEIGHT
ON SPAC IPO

HAYMAKER ACQUISITION II landed US$350m from
its IPO on Thursday.
Sole bookrunner Cantor Fitzgerald was able
to boost the offering to 35m units, from
30m, printed at US$10.00.
Cantor and Stifel Nicolaus, an adviser,
purchased 5.33m warrants for US$1.50
apiece (US$8m) in a concurrent private
placement. Cantor typically invests in all
the SPACs it underwrites.
Haymaker traded on Friday on its Nasdaq
debut at US$10.09, strong by SPAC
standards.
Haymaker is led by Steven and Andrew
Heyer, the brotherly management team
that led Haymaker I through the acquisition
OFûHEALTHûlTNESSûCENTREûOPERATORû
OneSpaWorld.
With Haymaker II, they will focus on
similar consumer-oriented targets.

OWL ROCK CAPITAL IPO HAS
HEAVYWEIGHT BACKING

OWL ROCK CAPITAL, an externally managed BDC
that is led by former executives of
"LACKSTONE û++2ûANDû'OLDMANû3ACHS ûlLEDû
for a US$172m IPO on Tuesday.
Goldman Sachs, Bank of America Merrill Lynch,
RBC Capital Markets, SunTrust Robinson

Humphrey and Wells Fargo are the top-line

underwriters in a syndicate of 15 banks.

Owl Rock was formed in 2015 by GSO

Capital Partners founder Douglas Ostrover,

former KKR energy and infrastructure head

Marc Lipschultz, and Craig Packer, the

former co-head of Americas leveraged

lNANCEûATû'OLDMANû3ACHS

4HEûDEALûISûPOTENTIALLYûTHEûlRSTû"$#û)0/û

since Bain Capital Specialty Finance went

public in a tough US$151m placement in

November.

At US$18.56 a share the Bain BDC is

trading below its US$20.25 IPO price. Owl

Rock’s sponsors have taken steps to avoid a

similar blowback.

4HEûLEVERAGEûlNANCEûHEAVYWEIGHTSûBEHINDû

Owl Rock arranged US$5.5bn of committed

lNANCINGûINû-ARCHûûTHATûHASûREQUIREDû

private investors to purchase Owl Rock stock

on an as-needed basis. Owl Rock is expecting a

lNALû53BNûPAYMENTûFROMûITSûPRIVATEû

backers on or around June 17.

Like most externally managed vehicles,

Owl Rock will be required to pay its

investment adviser Owl Rock Capital

Management quarterly management and

incentive fees that are payable quarterly in

arrears.

The management fee amounts to 1.5% of

Sientra’s annual gross assets minus cash but

including assets that were purchased with

debt. The incentive fees amount to 17.5% of

income and capital gains above a 1.5%

hurdle.

New investors may be willing to overlook

the terms of Owl Rock’s external

management while interest rates remain

low.

4HEûlRSTûQUARTERLYûDIVIDENDûOFûûCENTSûAû

share has already been declared and is

payable to shareholders of record as of

September 30.

Assuming the offering prices close to the

March 31 NAV of US$15.27, the payout

implies an initial 8.1% annual yield.

The valuation is protected by a US$150m

share repurchase plan that allows the

company to buy back stock when the price

falls below NAV.

Owl Rock is using the proceeds from its

IPO to repay debt that went into building its

portfolio.

4HEûCURRENTûPORTFOLIOûCONSISTSûOFûlRSTûLIENû

(81.7%) and second-lien senior secured (16.5%)

debt investments spread across 81 companies

with an average commitment of US$84m.

BRAZIL

BTG PACTUAL SEEKS TO LIFT FREE FLOAT

)NûAûBIDûTOûINCREASEûITSûFREEûmOATû"RAZILSû

BANCO BTG PACTUAL launched a R$2.3bn

(US$595m) all-secondary stock sale

Wednesday.

The offering allows the selling

shareholders to take advantage of a

doubling in the Brazilian bank’s shares so

far this year.

BTG Pactual, Morgan Stanley, UBS and Banco

do Brasil Securities, the joint bookrunners,

launched marketing of 48m units,

composed of one common and two

preferred shares, Wednesday. The banks

have a 15% greenshoe option and provision

for a 20% upsize.

Pricing is expected post-close Tuesday,

June 11.

Banco BTG shares fell 3.3% Wednesday

but recovered by midday Friday to R$47.98,

an all-time high.

NEOENERGIA FILES FOR R$3.5bn IPO

Electric utility NEOENERGIA launched an all-

secondary IPO on Thursday night that

targets up to R$3.5bn (US$905m) of

proceeds.

JP Morgan, Bank of America Merrill Lynch and

Banco do Brasil are marketing 208m shares at

R$14.42-$16.89 for pricing after the market

close on June 27.

Shareholders Iberdrola (29.7m shares),

Banco do Brasil (113.4m shares) and

Brazilian pension fund Previ (64.9m shares)

are the sellers.

Previ is selling on the Neoenergia IPO in

an effort to diversify its holdings. The

pension fund plans to be an active investor

in upcoming deals, according to Reuters.

The Brazilian equity market has been

heating up in recent weeks as Petrobras

(energy), Linx (software), Banco BTG Pactual

(investment bank) and CPFL Energia (utility)

have announced plans to sell stock in

coming months.

CANADA

DESCARTES SYSTEMS EXPANDS ON

US$219m RAISE

DESCARTES SYSTEMS, a Canada-domiciled, dual-

listed provider of logistics software, put its

stamp on US investors with a multi-

jurisdictional US$213m primary stock sale.

Descartes shares got hit while the deal

was marketed but rebounded strongly post-

pricing, highlighting the costs and

opportunities that come with broadening a

shareholder register.

Barclays and RBC Capital Markets, along

with a Canadian-heavy syndicate of co-

managers, joint-bookran the placement of

6m shares ultimately priced at US$35.50

(C$47.46), a 3.1% discount to last sale but 9%

ALL

INûlLE

TO

OFFERûDISCOUNT

EQUITIES AMERICAS