Even though tech stocks recovered some
ground earlier in the week, EPAM fell as
much as 11% during this period, Globant
declined 11% and Endava (which went
public in July) dropped 24%.
These falls meant that Valtech’s
marketing range, which management
thought fair, no longer worked for investors
ABLEûTOûlNDûBETTERûVALUEûBUYINGûTHEûCOMPS
“If you launched at the beginning of last
week [the week beginning October 8] or the
back end of the prior week, you were right
in the teeth of it and particularly if you were
a tech company,” one banker close to the
deal said.
“This was not about the company, but just
about the movement of the comps in the
market.”
Valtech has not given up all hope of going
public.
h$UEûTOûRECENTûNEGATIVEûmUCTUATIONûINûTHEû
US stock market, Valtech has made the
strategic decision to delay listing until
market conditions are more favourable,” the
company said in a statement emailed to IFR.
“We remain committed to this course and
regret that these unanticipated market
conditions have caused us to halt planned
activities at this time.”
JLEN BEATS £50m TARGET TO
RAISE £105m
JOHN LAING ENVIRONMENTAL ASSETS GROUP was
one of a handful of fund equity raisings last
week that upsized on heavy demand.
Having opted for a target of £50m to pay
down its revolving credit facility following
three acquisitions, JLEN picked up £105m
from a placing, offer for subscription and
intermediaries offer.
As a result of the upsizing, JLEN will be
able to fully repay the outstanding balance
on the revolving credit facility.
4HEûLEVELûOFûDEMANDûWASûSUFlCIENTûTHATû
SIGNIlCANTûSCALINGûBACKûWASûSTILLûREQUIRED
7INTERmOOD managed the fundraising.
AMERICAS
UNITED STATES
US ECM BRACES FOR LATE-YEAR STRIFE4HEû53û)0/ûMARKETûHASûHITûAûDIFlCULTûPATCH û
but another four companies will try their
luck in the coming week with deals seeking
a combined US$1.6bn.
Of the nine IPOs aimed to price in the past
week, two were postponed (Valtech and
Riley Exploration Permian) and all others
except for medical device company SI-BONE
and Macau casino resort STUDIO CITY
INTERNATIONAL were forced to either cut their
marketing range or price below range.
The US stock market showed some signs
of rebounding through the week, but
remained volatile with the third-quarter
earnings season now well under way and
concern about rate rises prompting some
INVESTORSûTOûTAKEûPROlTS
On a brighter note, IPOs generally remain
a source of alpha (still up an average of 18%
this year) and most of the past week’s deals
that did price traded up in the aftermarket,
if only modestly in some cases and after
large price concessions.
"ANKERSûREMAINûCONlDENTûTHATûHIGH
quality growth companies still have appeal
in this market, a possible opening for
Chinese music streamer Tencent Music
Entertainment and fashion platform
Revolve Group to go public before the year
is out.
Still, there are signs that generalist
investors are abandoning the healthcare
sector, while pressure on small cap stocks is
also undermining demand for new issues.
The week ahead brings the US$1.1bn IPO
of Brazil payments company STONECO, the
US$400m IPO of YETI, and sub-US$100m
deals from TWIST BIOSCIENCE and Israel’s GAMIDA
CELL. With Brazil stocks outpacing the S&P
500 this month and the backing of Berkshire
Hathaway, fast-growing StoneCo might
prove the strongest deal.
The past week saw a dearth of follow-on
ACTIVITYûCONlNEDûMOSTLYûTOûSMALLûBIOTECHû
deals), partly due to earnings distractions
but also a function of volatile markets. The
week ahead brings third-quarter earnings
from 160 S&P 500 companies, squeezing
opportunities for secondary stock sales.
Once earnings are out of the way, the big
question remains how many companies will
be prepared to brave market conditions, the
dilemma being whether to raise money
while it may still be possible or to wait for
the air to clear.RILEY EXPLORATION PULLS PLUG ON
PERMIAN IPORILEY EXPLORATION PERMIAN, a Permian E&P
focused on the San Andres formation of the
northwest shelf, is re-evaluating its options
after electing to defer its US$100m IPO.
“We will continue to evaluate and see if
conditions improve,” said Riley Exploration
IR head Chris Delange. “We’re continuing to
work through our 2019 capex plans. There
aren’t many companies that have a
DElNITIVEûPLANûINûPLACEûFORûv
“That usually doesn’t happen until
January or February.”
Riley had been looking to spend
53MûINûlSCALû3EPTEMBER ûûTOû
drill 36 gross (27 net) wells, an acceleration
from the US$52.6m spent last year to drill 18
gross (10 net) wells.
SunTrust Robinson Humphrey and Seaport
Global Securities marketed 6.7m shares at
US$14–$16 for two weeks before pulling the
plug on Tuesday.
Riley is also working with banks on the
semi-annual re-evaluation of its asset-based
revolver, currently sized at US$100m with
US$57m drawn, that was to have been
completed in “mid-October”. Other
elements of the capital structure, such as
US$50m of 6% series A preferred PIK stock
and US$1m of cash available at June 30,
remain in place.LOGICBIO PRICES IPO BELOW RANGELOGICBIO THERAPEUTICS, a pre-clinical gene
therapy specialist, capped a disappointing
week for lifescience IPOs with a below-range
pricing outcome.
Jefferies, Barclays and William Blair bumped
up the number of shares sold to 7m before
pricing at US$10.00, versus the marketed
terms of 5.77m shares at US$12-$14.
The US$70m deal was backed with an
indication of interest from existing
shareholders for up to US$30m, or 43% of
the deal.
LogicBio has raised US$50m privately
since it was formed in August 2014,
including US$45m from a Series B that
closed last summer.
The IPO marks a 3.5-times step-up from an
equivalent price of US$2.85 for the Series B
round.
OrbiMed anchored the private round with
an US$11m commitment and is LogicBio’s
largest shareholder with a 35% pre-offer
stake.
LogicBio has about US$85m of cash or 18
months of funding. Its lead drug is a
potential treatment for a rare paediatric
liver disorder called MMA.
The drug has already demonstrated proof-
of-concept in animal studies. LogicBioUS EQUITIES
BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share
bank or group issues US$(m) (%)
1 Morgan Stanley 132 19,856.47 13.2
2 JP Morgan 157 17,019.46 11.3
3 Goldman Sachs 116 16,934.60 11.3
4 Citigroup 109 13,612.34 9.1
5 BAML 113 11,233.44 7.5
6 Barclays 72 10,251.69 6.8
7 Credit Suisse 76 7,748.15 5.2
8 Wells Fargo 63 6,437.25 4.3
9 Jefferies 93 5,632.37 3.8
10 RBC 62 5,248.13 3.5
Total 671 149,955.53
Including all domestic and international deals and rights issues
Source: Refinitiv SDC code: C3r