It has been a long hibernation for IPOs, primarily because of the volatility in the markets. But now it looks like things are getting back to normal. Yes, there are three new stocks on tap for this week.
If anything, there should be a hearty appetite for deals, as we got a glimpse of last week. Bats Global Markets Inc. (BATS), which operates an alternative market system for investors, pulled off a successful IPO, with the stock up 21% on Friday. The company bumped up the number of shares offered from 11.2 million to 13.3 million, which certainly was an indication of robust demand.
OK, so what are the new stocks for the week? Well, here’s a look at all of them:
New Stocks to Watch: MGM Growth Properties LLC (MGP)
Expected Offering Date: Wednesday
MGM Growth Properties LLC (MGP) is the real estate investment trust (REIT) for MGM Resorts International (MGM). The entity holds marquee properties on the Vegas Strip, such as Mandalay Bay, The Mirage, Monte Carlo, New York-New York, Luxor and Excalibur, and The Park. But there are also holdings in other areas of the U.S., like MGM Grand Detroit, as well as the Beau Rivage and Gold Strike Tunica (which are based in Mississippi).
So why this move with MGP? One reason is that MGM is looking for ways to reduce its debt. What’s more, the company thinks this spin-off can provide some tax advantages and more transparency, which could lead to overall stronger valuations.
Last year, MGP posted revenues of $600 million and operating income of $437.2 million. Much of the revenues comes from a master lease with MGM. But yes, MGP plans to increase growth with new real estate developments and acquisitions.
As for the upcoming IPO, the company plans to issue 50 million shares at a range of $18 to $21 and the lead underwriters include Bank of America Corp (BAC), JPMorgan Chase & Co (JPM), Morgan Stanley (MS), Evercore Partners Inc. (EVR), Barclays PLC (ADR) (BCS), Citibank Inc (C) and Deutsche Bank (DB).
New Stocks to Watch: American Renal Associates Holdings (ARA)
Expected Offering Date: Thursday
American Renal Associates Holdings (ARA) is the U.S.’s largest provider of dialysis services. The focus is primarily on treating those patients with advanced-stage chronic kidney disease.
A key part of the strategy for ARA is forming joint ventures with physicians. Keep in mind that the company generally retains majority equity interests in each of the entities.
Growth has certainly been strong, with the company opening 15 or more clinics each year since 2012. ARA has also been able to post strong profits. Last year, the company posted adjusted EBITDA of $113.8 million on revenues of $657.5 million.
Regarding the IPO, ARA expects to offer 7.5 million shares at a range of $20 to $23, and the lead underwriters include BofA Merrill Lynch, Barclays, Goldman Sachs Group Inc (GS), Wells Fargo & Co (WFC) and Suntrust Banks, Inc. (STI).
New Stocks to Watch: SecureWorks (SCWX)
Expected Offering Date: Friday
SecureWorks (SCWX), which is a spin-off of Dell, is a top player in the fast-growing cybersecurity space. The technologies are for companies of any size and can be deployed in diverse IT environments, whether on-premise, in the cloud or a hybrid of the two.
At the heart of SCWX is its Counter Threat Platform, which processes as much as 160 billion events on a daily basis. All this has proven effective in taking the right actions against potential threats.
All in all, the growth has been strong. From fiscal 2014 to 2016, the revenues jumped from $205.8 million to $339.5 million. Although, the company has continued to lose money, with SCWX posting a $72.4 million net loss in fiscal 2016.
Regarding the IPO, the company intends on issuing 9 million shares at a range of $15.50 to $17.50 and the lead underwriters include BofA Merrill Lynch, Morgan Stanley, Goldman Sachs and J.P. Morgan.
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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