Realty Income opened Thursday trading
at US$74.30, ticked a low of US$73.26
shortly thereafter, and languished
throughout the session to close at
US$72.89, forming a chasm between the
US$77.40 print on the 9m shares sold the
night before.
“Our understanding is that it got done
but with heavy retail allocations,” said a
BANKERûINVOLVED ûWHOSEûlRMûSIGNEDûONûFORû
a small ticket after the formal launch.
“Retail does not buy in the aftermarket,
particularly if you don’t scale them back. I
was a little bit surprised by the size in a
market like this.”
Bank of America, Morgan Stanley, Wells
Fargo and RBC Capital Markets, which had
marketed the offering overnight at
US$77.40-$79.00, were later joined by
eight additional banks on the bookrunner
line and 18 in more junior roles – yes, a
30-strong syndicate.
The one-day delta equates to US$40m of
paper losses.
Realty Income managed to lock down
funding to repay part of the US$1.2bn drawn
on its revolver, providing capacity to fund
US$2.25bn-$2.75bn of acquisitions it hopes
to complete this year.
Realty Income, which dubs itself the
monthly dividend company, last month
bumped its monthly payout to 23.25 cents,
or 3.6% annualised at offer.
!MIDûAûmIGHTûTOûSAFETY û
YEARû53û
Treasuries yielded an anaemic 1.335% at the
time of the Realty Income follow-on, and
1.162% as of midday Friday.
On the basis of that income pick-up and
improved debt and equity cost of capital,
analysts at Jefferies last week bumped their
price target on Realty Income to US$107,
from US$102.B2B PLATFORM ZOOMS TOWARDS IPOThe US IPO market in 2020 has so far
remained bereft of cloud software deals,
though tech ECM bankers have been
promising that will soon change.
Laying the groundwork for a US$500m
offering that could be priced as soon as
next month, ZOOMINFO TECHNOLOGIESûlLEDû
publicly early on Thursday for a Nasdaq
IPO.The cloud-based sales and marketing
“intelligence” platform/B2B contact
DATABASESûlLINGûNAMESûJP Morgan and
Morgan Stanley as leading a syndicate of 16
banks, unusually specifying that those
two banks are listed in alphabetical
order.
CEO Henry Schuck founded Vancouver-
based predecessor company DiscoverOrg in- It then bought Zoom Information for
US$748m early last year from private equity
lRMû'REATû(ILLû0ARTNERS ûWHICHûHADûBOUGHTû
THEûBUSINESSûFORûSIGNIlCANTLYûLESSûJUSTûû
months prior.
ZoomInfo’s current major shareholders
INCLUDEûPRIVATEûEQUITYûlRMSû4!û!SSOCIATES û
Carlyle and 22C Capital.
The combined company generated nearly
US$300m of revenues last year, mostly from
subscriptions paid by 192,000 users, and
made a bottom-line loss of US$78m.
4HISûLOSSûPARTLYûREmECTSûTHEûCOMPANYSû
leveraged balance sheet, which carried
US$1.2bn of long-term debt and US$41.4m
of cash at year-end.
On an adjusted Ebitda basis, ZoomInfo
generated US$173.2m last year.
The company cites “allocated combined
receipts” (revenue including that recorded
by acquired companies previously) as a non-
GAAP measure of organic growth. These
receipts rose 39% to US$336m last year.
The IPO proceeds will be used to purchase
holding company and LLC units, and to
repay debt.
The company does not plan to pay
dividends, though an operating entity paid
US$93.4m and US$16.5m in cash
distributions to equity partners in 2018 and
4HEû:OOM)NFOûPLATFORMûUSESûARTIlCIALû
intelligence and machine learning to help
MARKETERSûlNDûTARGETûACCOUNTSûANDû
customers.
Competitors include LinkedIn,
TechTarget, Infogroup and Dun &
"RADSTREET ûTHEûLATTERûNOTABLYûALSOûONûlLEû
CONlDENTIALLY ûFORûANû)0/
SELECTQUOTE SEEKS PUBLIC QUOTEDirect-to-consumer insurance platform
SELECTQUOTEûlLEDûPUBLICLYûONû&EBRUARYûûFORû
an NYSE IPO that could price as early asMarch, notwithstanding the deterioration in
fundraising conditions.
Credit Suisse and Morgan Stanley lead an 11-
lRMûSYNDICATE
Founded more than 30 years ago as the
lRSTûTERMûLIFEûINSURANCEûEXCHANGEûPLATFORMû
in the US, SelectQuote is on track to
generate more than US$480m of revenue
THISûlSCALûYEARûANDûISûPROlTABLE
In the half-year ended December, the
insurer’s top-line grew 37% to US$241.5m,
mostly in the form of commissions.
In the same period, it reported net income
of US$37.4m and adjusted Ebitda of
US$69.8m.
More than half of the company’s
revenue and earnings are generated from
the senior market, including Medicare
Advantage and Medicare Supplement
plans for retirees.
A banker close to the deal said investors
were interested in the space, noting the
lLINGûHADûSINCEûGENERATEDûSOMEûREVERSEû
inquiry.
One unusual aspect of the
SelectQuote story is that it has
historically purchased leads from
platforms owned by its executives,
including CEO Tim Danker, though at
least one of these platforms
(InsiderResponse) is in the throes of
being bought by SelectQuote.
3ELECT1UOTESûLONGûHISTORYûANDûlNANCIALSû
should enable it to distance itself from
“blitzscaled” DTC stories such as Casper
Sleep or Blue Apron.
Backed by Brookside Equity Partners,
3ELECT1UOTEûEARLIERûTHISûMONTHûlLEDû
CONlDENTIALLY ûTHOUGHûINûFACTûTHATûWASûAû
BELATEDûDISCLOSUREûSINCEûITSûlRSTûlLINGûWASûINû
late November.GIGCAPITAL3 SPELLS SPAC PPEGIGCAPITAL3 ûWHICHûlLEDûFORûAû53Mû.93%û
IPO last week, uses the trademarked term
“Private-to-Public Equity” (PPE) to describe
what it is. To all intents and purposes, it is a
SPAC.
GigCapital3 is seeking to sell 20m units at
US$10.00 apiece, the standard SPAC pricing
template.
Each unit comprises one common share
and one-half warrant.80 International Financing Review February 29 2020ECM DEALS: WEEK ENDING 28/2/2020
Stock Country Date Amount Price Deal type Bookrunner(s)
EDP Portugal 26/02/2020 €293m €4.45 Accelerated Bookbuild (Secondary) BofA, BNP Paribas
Sibanye-Stillwater South Africa 27/02/2020 R2.4bn R33.60 Accelerated Bookbuild (Secondary) BofA, Citigroup
JLEN Environmental Assets Group UK 26/02/2020 £57.2m 115p Follow-on (Primary) Winterflood
Sequoia Economic Infra Income UK 27/02/2020 £300m 112p Follow-on (Primary) Jefferies
Freshpet US 26/02/2020 US$231m US$66 Follow-on (Secondary) BofA
Passage Bio US 27/02/2020 US$216m US$18 IPO (Primary) JP Morgan, Goldman Sachs, Cowen
Realty Income US 26/02/2020 US$696.6m US$77.40 Accelerated bookbuild (Primary) BofA, Morgan Stanley, Wells Fargo, RBC CM10 IFR Equities and SE 2322 p 73 - 86 .indd 80 28 / 02 / 2020 19 : 13 : 56