IPO outlook: 4 deals on tap this week
As usual, housing and cloud names could be hot.
By Tom Taulli
Because of the holiday last week, the IPO market was fairly slow. Only two initial public offerings took place -- both biotech operators -- but they performed quite well. So far, Epizyme (EPZM) has soared 64% from its offering price, while Kamada (KMDA) has climbed almost 11%.
As for this week, the activity is set to pick up a bit. Four deals will hit the market, while two of those could be especially nice winners.
Let's take a look:
Colony American Homes
First up is Colony American Homes (CAHS) a real estate investment trust (REIT) that owns, operates and leases single-family properties. The size of the portfolio is nearly 10,000 homes and the locations include areas like Arizona, California, Colorado, Delaware, Florida, Georgia, Texas and more.
According to CAHS's own estimates, the cost basis of its wholly owned assets is about $1.1 billion. If the real estate market continues to improve, this is likely to increase. The company is still in the early stages, too, with monetization just starting in March 2012. For the remaining nine months of the year, CAHS was able to generate revenues of just under $10 million and lost about $2.4 million.
With the housing market as hot as it is, this IPO could have plenty of room for upside. Plus, it's been tough for investors to get access to residential real estate in the past (see InvestorPlace). Essentially, you had to buy homes, fix them up and rent them.
Now you can just buy shares of CAHS. The company plans to issue 20 million shares at a range of $11.50 to $13. The lead underwriters include Credit Suisse (CS), Morgan Stanley (MS) and Bank of America Merrill Lynch (BAC).
Housing might be hot, but so is the cloud. Textura (TXTR) is yet another cloud company, this time with a focus on the construction industry (see InvestorPlace). Essentially, the company's software helps to facilitate collaboration between owners/developers, general contractors and subcontractors. It can do things like handle reviews of project plans, bidding, payments/collections and legal documents. There are even systems to help keep in compliance with regulations, such as with environmental laws.
So far, the company's platform has managed over 13,000 projects, amounting to over $125 billion in value. In fact, from 2010 to 2012, revenues went from $6 million to $22 million. The company has continued to lose money, though. In 2012, the net loss was $18.8 million.
Still, if this IPO follow the trend so far this year, it could be a good one. Workday (WDAY) and ServiceNow (NOW) both rocketed onto the market recently. TXTR plans to issue 4 million shares at a range of $13 to $15. The lead underwriters include Credit Suisse and William Blair.
RCS Capital Corp.
RCS Capital Corp. (RCAP) is a holding company that provides broker-dealer and investment banking services for non-traded REITs. Many of the firm's investors are individuals, who have average subscription amounts of $30,000. Yet RCAP has still been able to raise substantial amounts of money. Last year, the total came to $3 billion.
The company has been growing at a nice pace, too. From 2010 to 2012, revenues climbed from $114.1 million to $287.5 million, while the net income swung from a loss of $2.4 million to a profit of $7.4 million.
RCAP plans to issue 2.8 million shares at a price range of $19 to $21. The lead underwriters include JMP Securities and Ladenburg Thalmann & Co.
Last, we have LightInTheBox (LITB) -- an e-commerce company that sells lifestyle products at reasonable prices. Often, there is some type of design customization, such as for a wedding dress, shoes, jewelry and so on.
A key to the strategy is sourcing from China, but main target markets include North America and Europe. The company reaches customers primarily through Google (GOOG) and Facebook (FB). From 2008 to 2012, revenues surged from $6.3 million to $200 million. And while the company has yet to post a full-year profit, it did make $1.1 million during its most recent quarter.
LITB plans to issue 8.3 million shares at a range of $8.50 to $10.50. The lead underwriters include Credit Suisse and Stifel.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
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