Upwork counts VCs Benchmark Capital
Partners (15%), Sigma Partners (14.2%) and
Globespan Capital Partners (12.9%), and
mutual fund T Rowe Price (10.6%) among its
biggest shareholders.NLIGHT RETURNS FOR INSIDER SALEIndustrial laser maker NLIGHT, one of 2018’s
best IPOs, returned to the ECM spotlight
with a circa US$119.3m first-time follow-on
that enabled VC backers to take profits.
Stifel and Raymond James, the same banks
that led the IPO, took out three days of
marketing before pricing 4.5m nLight
shares or 12.6% of the company’s expanded
capital at US$26.50 a share, a 14%
file-to-offer discount.
The deal was multiple times
oversubscribed and drew interest from both
new and existing investors.
Early in Friday’s session after pricing, the
shares were trading up at US$27.49.
Returning inside six-month lock-up
arrangements put in place for its April IPO
(priced at US$16.00 a share), nLight sold 845,237
shares, while selling shareholders, including
venture backers Menlo Ventures and Oak
Investment Partners, offloaded 3.65m shares.
Shares in nLight soared to as high at
US$43.63 in July, before losing some altitude
in sympathy with an earnings
disappointment from close comp IPG
Photonics.
Proceeds from the primary component of
the offering (nearly 20% of the deal) will be
used to fund unspecified acquisitions, but
until then will simply add to nLight’s
US$129.7m cash pile.
The company filed confidentially for the
offering on August 20, less than two weeks
after it reported strong second-quarter
numbers including a 49% increase in
revenues to US$51.7m, a more than
doubling of adjusted Ebitda to US$8.5m, and
an increase in gross margins to 34.2% from
30.8% in the year-ago period.The company also provided a third-
quarter revenue outlook that was better
than Street estimates.
Analysts have been fretting about
pricing pressure in low-end industrial
lasers, particularly in China, though nLight
is talking up the advantages of its products
versus the competition.
Alongside the offering, the company
announced the introduction of Corona, a
“breakthrough” fibre laser with
programmable beam quality and an
example of the company’s “highly
differentiated” technology.CANADA
STELCO SELLER TAKES LONG-TERM VIEWSTELCO, a Canadian steel producer, took the
unusual step of marketing an 8m-share,
all-secondary stock sale, breaking from the
Canadian tradition of overnight bought
deal financings.
The decision partially reflected
uncertainties surrounding trade relations
between the US and Canada and the
potential impact of steel tariffs on the steel
maker’s operations.
Another consideration was a
concentrated shareholder registry that has
the 10 largest institutions holding a 4.9%
stake combined, according to Thomson
Reuters data.
“In Canada, bought deals of secondary
sell-downs are more typical,” one ECM
banker involved in the deal told IFR. “But it’s
not unheard of to market. Marketing is a
way for Stelco to appeal to a broader set of
investors.”
Stelco shares slumped 9.7% to C$22.84
over the Wednesday marketing, so there
was a cost.
Goldman Sachs and BMO Capital Markets, the
active bookrunners, settled pricing on 8m
shares at C$22.65, taking the all-in discountto 10.4%, excluding underwriting fees.
Selling shareholder Bedrock Industries
by comparison paid a 4.1% all-in fee for a
block sale of 10m shares in April at
C$21.75, inclusive of a 4% fee paid to BMO
and Goldman Sachs.
The metals-focused PE firm, which took
Stelco public in November, at C$17.00 a
share, reduced its stake to 64.5%, from
73.5%. The hope is that underwriting fees
paid on the deal will be offset by selling at
higher prices in the future.
Stelco closed Thursday at C$23.34.
“You’re paying a couple of percentage
points to broaden the shareholder base,”
said a second banker close to the deal.
“Stelco has a pretty concentrated
shareholder base. It’s high quality but not
as deep as they’d like it to be.”STRUCTURED EQUITY
GERMANY
CB MARKET ON FRONT FOOT WITH
€500m ADIDAS DEALEquity-linked investors were treated to €500m
of five-year non-dilutive convertible bonds
from ADIDAS last Wednesday, re-opening the
market after a short summer lull.
Synthetics are not everyone’s cup of tea
due to their aggressive pricing, but the
combination of the German sportswear
company and a general lack of issuance so
far this year was enough for most investors
to participate: bankers involved suggested
that everyone at least took a look.
Although not rated, Adidas is perceived
as investment-grade and with two straight
bonds outstanding - 2021s trading at 19bp
over mid-swaps, and 2026s at 57bp over.
Leads used a credit spread of 40bp, with
implied volatility at 25.5%-33% versus
historic vol at an average of 27%.
The CBs came with a tiny coupon of
0.05% owing to tax regulations in Germany
and a fixed 40% premium, which
simplified pricing the call ahead of launch.
The reference price will be set from the
VWAP over 10 consecutive trading days
during September 6-19, allowing leads
time to hedge the call.
The bonds were offered at 104%-108%
and were covered shortly before 10am in
London. Guidance of 104%-106% followed
after an hour, with pricing eventually
coming at 104%. On the launch terms the
yield was negative 1.49% to negative 0.73%.
“The reaction was very strong,” said a
banker working on the deal. “There were96 International Financing Review September 8 2018GLOBAL CONVERTIBLE OFFERINGS – EMEA
BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share
bank or group issues US$(m) (%)
1 UBS 3 1,849.73 17 .3
2 Deutsche Bank 5 1,143.23 10 .7
3 SG 7 1,072.57 10 .0
4 JP Morgan 6 1,069.08 10 .0
5 Citigroup 6 9 13.46 8.6
6 BNP Paribas 6 673.6 3 6.3
7 Goldman Sachs 5 6 32.75 5.9
8 BAML 4 506.69 4 .7
9 HSBC 4 4 64.19 4 .3
10 Morgan Stanley 3 39 9.50 3. 7
Total 31 10,676.88
Including exchangeables.
Source: Thomson Reuters SDC code: C09dALL INTERNATIONAL ASIAN CONVERTIBLES
BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share
bank or group issues US$(m) (%)
1 Goldman Sachs 5 2,424.34 2 0.6
2 Credit Suisse 8 1,693.90 14 .4
3 Nomura 12 1,503.35 12.8
4 JP Morgan 6 1,115.55 9 .5
5 Daiwa Securities 4 1,005. 47 8.5
6 Morgan Stanley 6 594 .90 5. 1
7 BNP Paribas 3 58 1.83 4 .9
8 Sumitomo Mitsui Finl 3 566.6 1 4 .8
9 China Merchants Secs 1 333.33 2.8
=9 Citic 1 333.33 2.8
Total 40 11,770.35
Including exchangeables.
Source: Thomson Reuters SDC code: M1010 Equities and SE 2250 p81-98.indd 96 07/09/2018 20:19:33