A trio of private equity-backed companies began trading Friday after IPOs. Their immediate market feedback? A bit of a mixed bag.
Let’s start with the clearest success: REV Group (NYSE: REVG), a manufacturer of RVs, ambulances and other specialty vehicles, which raised $275 million by selling 12.5 million shares for $22 each, above the company’s expected price range of $19 to $21. Reception on the market Friday was even stronger, as the REV’s stock shot up to finish the day at an even $25 per share. The company has been backed by American Industrial Partners since 2010.
Carlson Capital's Double Black Diamond fund added 3.09% net of fees in the second quarter of 2021. Following this performance, the fund delivered a profit of 5.3% net of fees for the first half. Q2 2021 hedge fund letters, conferences and more According to a copy of the fund's half-year update, which ValueWalk has been Read More
It was less sunshine and rainbows for Jagged Peak Energy (NYSE: JAG), a portfolio company of Quantum Energy Partners. After anticipating a figure between $16 and $18, the oil & gas company instead priced its IPO at $15, with Jagged Peak and its existing shareholders selling a combined 31.5 million shares. The stock finished Friday trading at $14.33, establishing a market cap of just over $3 billion.
Which brings us to JELD-WEN (NYSE: JELD), a manufacturer of doors and windows whose Friday went a little bit more as planned. The Onex portfolio company priced its IPO at $23, on the upper end of its expected range; it sold 25 million shares to raise an even $575 million in fresh capital. JELD-WEN stock closed out the week at $26.12.
The mere fact of three PE-backed companies going public on the same day could be a shot in the arm for the moribund IPO market. Last year, there was an average of a little more than one PE-backed business running the IPO gauntlet every two weeks. But what can we learn from these specific companies?
In the case of Jagged Peak, which operates mainly in the red-hot Permian Basin, the company’s initial struggles may depress other future energy IPOs. Oil prices continue to recover from their early-2016 nadir, though, which will likely have more to say about the fate of future companies than the public interest (or lack thereof) in Jagged Peak.
For REV, meanwhile, Friday highlights the importance of strong growth numbers. For fiscal 2014, the company logged net income of $1.5 million, adjusted net income of $14 million and adjusted EBITDA of $62 million. For fiscal 2016, those figures jumped to $30 million, $55 million and $127 million respectively. It’s easy to see why public investors are excited about the company’s future.
Article by Kevin Dowd, PitchBook