The IPO (initial public offering) market has gotten stronger in 2024, according to the Q2 2024 quarterly review from IPO specialist Renaissance Capital. That has resulted in a more buoyant market for secondary offerings.
According to Renaissance, 39 IPOs raised nearly $9 billion in the second quarter, 35% higher than Q2 2023 and 324% higher than Q2 2022. Approximately 20 companies raised more than $100 million in their IPOs.
Late in the second quarter, Dutch Bros (NYSE:BROS) conducted a $344 million secondary offering, enabling private equity investor TSG Consumer Partners to sell 8.76 million shares of the drive-thru coffee chain. Since Dutch Bros went public in September 2021, it has conducted four secondary offerings totaling $1.16 billion.
That got me wondering about who else was doing big secondary offerings.
I’ve got three stocks to buy that have had at least one secondary offering in 2024 for gross proceeds of at least $100 million.
Nasdaq (NDAQ)
Nasdaq (NASDAQ:NDAQ) is the largest of the three companies doing recent secondary offerings with a market capitalization of $39.6 billion.
On July 26th, the company announced it would make a secondary offering for 41.6 million of its shares currently held by Argus Seller LP, an affiliate of tech private equity firm Thoma Bravo.
The shares were sold at $65.30 each for net proceeds of $2.69 billion for the selling stockholder. Nasdaq didn’t receive any of these proceeds. Before the stock sale, it owned 14.86% of Nasdaq. After the secondary, it still owns 7.45%.
Thoma Bravo received these shares in 2023 after it sold Adenza, a software provider it sold to Nasdaq for $10.5 billion in cash and stock. As part of the secondary offering, Nasdaq agreed to buy 1.2 million shares of its stock from Argus Seller LP for up to $120 million.
Nasdaq reported Q2 2024 results on July 25. The highlight was its annualized recurring revenue, which was $2.67 billion, 6% higher year-over-year on an organic basis. Meanwhile, its non-GAAP operating income was 7% higher to $620 million.
Its shares are up 34% over the past year and 106% over the past five years.
Permian Resources (PR)
Permian Resources (NYSE:PR) is the second-largest of the three companies doing recent secondary offerings with a market cap of $11.37 billion.
As its name suggests, it is a Texas-based independent oil and natural gas company and the second-largest that focuses solely on the Permian Basin.
On July 29th, the company announced a strategic bolt-on acquisition of 29,500 net acres, 9,900 net royalty acres, and 15,000 Boe/d (barrels of oil equivalent per day) next to its existing position in Reeves County, Texas. It is buying the acreage from Occidental (NYSE:OXY) for $817.5 million. The transaction is expected to close by the end of September.
To help pay for the acquisition, the company announced on July 29 that it would do a secondary public offering of 26.5 million Class A shares. The equity sale would raise approximately $400 million based on the current share price. At the same time, it is selling $1.0 billion in senior unsecured 6.25% notes due 2033, up from the original $750 million.
Compared to Occidental, its shares are up 33% on a relative basis over the past year.
Getty Realty (GTY)
Getty Realty (NYSE:GTY) is the smallest of the three companies doing recent secondary offerings with a market cap of $1.65 billion.
Of the three stocks, it is the worst-performing, with its share price down nearly 7% in the past year. However, due to its quarterly dividend of 45 cents, its total return is more palatable -2.85% over the past year.
Getty is a triple net lease REIT (real estate investment trust) that acquires, finances, and develops convenience stores, automotive and other single-tenant retail real estate.
It generates $185 million in annual base rent thanks partly to its 99.7% occupancy rate. Its top three markets are New York (15%), Washington D.C. (7%) and Boston (5%). Overall, it owns 1,124 properties in 42 states and Washington, D.C.
On July 30th, the company priced its secondary public offering of shares. It will sell 3.5 million shares at $30.10 a share for gross proceeds before expenses of $101.1 million. The company plans to use the proceeds for general corporate purposes, including funding acquisitions and repaying outstanding debt.
In the second quarter, its AFFO (adjusted funds from operations) was $32.2 million, 13.0% higher than Q2 2023. YTD, they’re up 14.2% to $63.6 million.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
