Three initial public offerings could still deliver what would be only the fifth $1 billion week for US listings in more than a year, with one company already topping its fundraising goal but another falling short.
Savers Value Village Inc., the first of the three IPOs to price Wednesday, increased the size of its offering and exceeded its price target to raise $401 million. The thrift retailer said in a statement that it and its private equity backer sold about 22.3 million shares for $18 each, after marketing 18.75 million shares for $15 to $17.
The second, Kodiak Gas Services Inc., priced 16 million shares at $16, raising $256 million, it said in a statement. That was well below the marketed range of $19 to $22.
The listings, along with a third planned for Wednesday by Fidelis Insurance Holdings Ltd., come on the heels of this month’s offering by Cava Group Inc. that exceeded the fast-casual restaurant chain’s fundraising goals and has since delivered a 92% return to IPO investors.
The three share a key attribute with Cava’s: they have made money. An overall positive showing by the three would bolster the notion that US IPOs are ready to emerge from their deepest and longest slump since the Financial Crisis more than a decade ago.
Don’t expect a return to the record-setting frenzy of 2021, when more than 1,000 firms — many of them money-losing growth companies — raised almost $339 billion on US exchanges, according to data compiled by Bloomberg. That year, IPO totals failed to top the $1 billion mark for only six weeks, four them tied to US holidays plus two in August, the data show.
‘Highly Selective’
“For the foreseeable future the buy-side is going to be highly selective on IPOs and new issues in general, because they can,” said Seth Rubin, head of equity capital markets at Stifel. “We’re not getting back to a wide open market where every company can go public. I think it’s going to be selective and that’s healthy.”
Savers Value Village, Kodiak and Fidelis are all set to begin trading Thursday on the New York Stock Exchange. The week’s listings include Korean barbecue chain GEN Restaurant Group Inc., which raised $43 million in its listing Tuesday and rose 28% in its debut.
With 317 stores, Bellevue, Washington-based Savers Value Village is the largest for-profit thrift retailer in the US and Canada. It generated 2022 net income of $85 million on net sales of $1.44 billion, according to it’s filings with the US Securities and Exchange Commission.
Funds managed by Ares Management Corp., which will continue to control the retailer, sold more than 3.5 million shares in Wednesday’s IPO, according to the statement. The company’s shares will trade under the symbol SVV.
Profit to Loss
Kodiak, based in Montgomery, Texas, had net income of $106 million on revenue $708 million last year, according to its filings with the SEC. In the first quarter, though, Kodiak slipped into the red with a loss of $12.3 million on $190 million in revenue.
An affiliate of Swedish investment firm EQT AB will own about 79% of Kodiak after it begins trading on the under the symbol KGS.
Fidelis and current investors plan to sell a total of 17 million shares for $16 to $19. The Bermuda-based reinsurer reported net income of $62 million in 2022, with $1.73 billion in net income in the first quarter.
Crestview Funds and a subsidiary of Abu Dhabi Investment Authority, along with affiliates of CVC Capital Partners and Goldman Sachs Group Inc., are among the investors planning to sell more than 11 million shares, which will trade under the symbol FIHL.
In addition to whetting investor appetite, the listings will deliver fees for Wall Street Banks that have seen their IPO business languish.
JPMorgan Chase & Co. is a lead underwriter for all three, while Goldman Sachs is on the top line for Kodiak and Savers Value Village along with Jefferies Financial Group Inc. for Fidelis and Savers Value Village. Additionally, Barclays Plc is among the top banks for Kodiak, as is UBS Group AG for Savers Value Village.
(Updates with Kodiak Gas Services pricing in third paragraph.)
