Although some of the highly anticipated deals like Taylor Morrison Homes and Sea World now look like they may be off our IPO calendar until April, this year's offerings have generated huge interest so far.
It seems large institutional investors and hedge funds are hungry for a quality IPO product and Wall Street is rushing to meet the demand.
On Thursday we saw two pricings that immediately went to premiums in early trading. Enanta Pharmaceuticals Inc. (Nasdaq: ENTA) was priced at $14 and traded as high as $16.94 immediately after markets opened. Real Estate Investment Trust Aviv REIT (NYSE: AVIV) priced its shares at $20 and moved as high as $22.98 in early first-day trading.
This is on the heel of very strong performance from other deals priced in the last month.
As the housing markets continue to show signs of recovery, wood products company Boise Cascade Co. (NYSE: BCC) has risen 59% since its Feb. 5 pricing. The same housing trends have helped shares of Tri Pointe Homes Inc. (NYSE: TPH) rise by more than 20% since its debut in late January.
Revenue management software provider Model N Inc. (NYSE: MODN) rose 35% in first-day trading earlier this month.
The final week of March will include two deals that are expected to price their initial offerings. Let's take a look.
Two Deals for Your March 2013 IPO Calendar
On Wednesday, March 27 Garrison Capital (Nasdaq: GARS) will offer 5.3 million shares at $15 a share.
The company is a non-diversified closed fund management company that intends to invest the proceeds in debt securities and loans to U.S.-based middle market companies. They will be treated as a business development company and pass through at least 90% of their taxable income to shareholders. The fund's stated goals are income and capital appreciation.
As of year-end 2012 the company had an investment portfolio of $220 million to 49 different companies. The portfolio had an average yield of 9.62% with an average loan life of 47 months. The portfolio is spread across a wider range of industries with retail food stores being the highest exposure at 15%.
The offering is co-managed by Baird and Oppenheimer.
The biggest deal of the week will be the March 28 IPO of Pinnacle Foods (NYSE: PF). The food products company will price 29 million shares between $18 and $20 a share. The offering will raise $551 million at the midpoint of the range.
The company is a manufacturer and marketer of food products and has a portfolio of highly recognized brands. Its divisions include Birds Eye Frozen Foods and Duncan Hines, names used by millions of consumers. It also has a Specialty Foods division that features snack products such as Snyder's of Berlin as well as private label products.
According to the prospectus filed with the U.S. Securities and Exchange Commission, the company's products like Vlasic Pickles, Mrs. Paul's Fish Sticks and Duncan Hines cake mixes are found in 85% of all U.S. homes. Pinnacle is #1 or #2 in 10 of 12 market classifications in which it competes.
The company believes that its high EBITDA margins will enable it to deliver value to shareholders by paying down current debt levels and providing regular dividend payments. The company intends to pay a quarterly dividend of 18 cents a share, which will provide a yield of 3.6% annually at the high end of the pricing range.
The company was taken private by private equity firm Blackstone Partners back in 2007. In 2009 the company acquired Birds Eye Frozen Foods and combined it into the company's regular operations. After completion of the offering Blackstone will still own 70% of the shares of the company. The proceeds of the offering will be used to pay down debt.
The deal has a large group of co-managers including Barclays, BofA Merrill Lynch, Credit Suisse, Goldman, Sachs, Morgan Stanley, and UBS Investment Bank.
The Pinnacle offering should provide a strong close to what has been a very healthy month for initial public offerings. As long as the equity market remains fairly firm we should see a busy IPO calendar in April.