Two of the biggest initial public offerings to hit Wall Street this year are pricing their shares Wednesday night.
They could make or break the IPO market for the rest of 2015.
Neither of these deals is terribly exciting, but they’re both big. First Data, a global payments processor, is looking to raise nearly $US4 billion, and plans to use the money to repay debt. Albertsons, the supermarket chain, is asking investors for almost $US2 billion.
Neither company is incredibly exciting either, but they are both leaders in their respective markets. So if they’re successful they could ease the way for other companies looking to tap investor demand.
“If this new IPO class is received well by the market, it should create a virtuous circle of confidence, and bring other issuers out of the woodwork,” said Jeffrey Nassof, vice president of consulting services at Freeman & Co.
The IPO market could use a boost right about now. Proceeds raised in US IPOs are down more than 44% from last year, and the number of deals is down by about 20%, according to Renaissance Capital, which analyses initial public offerings.
And its not just that there’s been a dearth of offerings. If the market isn’t receptive to newly listed shares, that could discourage IPO investors looking for a quick profit.
Last week, flash-storage provider Pure Storage fell in its trading debut ending its first day of trading below its private market valuation.
“When you price things very aggressively in the private market, it’s not rational to expect them to pop in the public market,” said Lise Buyer, an IPO consultant with Class V Group in Silicon Valley .
She’s reluctant to call Pure Storage’s IPO bad news for the tech sector. It did, after all, raise more than $US400 million in new capital — but is equally unsure that other tech IPOs will come flowing down the pipeline this year.
Here’s what’s on schedule for this week, and beyond:
Supermarket chain Albertsons, which recently completed a merger with Safeway, is expected to price shares Wednesday at between $US23 to $US26 a share. The company will sell nearly $US2 billion in stock, all of it to pay down debt from its acquisition of one of its biggest competitors, whic losed earlier this year. This would give the Boise, Idaho-based company a valuation of more than $US12 billion at the top of its range.
Also expected to make its market debut on Thursday is private-equity backed First Data Corp., a pre-crisis tech buyout from private equity firm KKR. The Atlanta-based tech company will debut on public markets selling nearly $US4 billion worth of stock -- all of it to pay down loans that came as part of its buyout just over eight years ago. After how poorly KKR's biggest buyout, TXU Corp., fared, this deal has a great deal of importance to the private equity firm and its remaining founders.
Luxury sports car maker Ferrari is revving its engine for a big market debut that could value the company at up to $US10 billion. The company will sell shares in the $US48 to $US52 range and will unload $US900 million in shares at the offering, expected to price on Oct. 20. Why IPO now? The company is owned by Fiat Chrysler, which has seen a massive appreciation in their shares since its own late 2014 market debut.
High-end retailer Neiman Marcus once had investment bankers excited for a big public offering after the company traded hands between private equity investors after its 2005 LBO. But, now, the new owners Ares Management and a big Canadian pension apparently have cold feet about making a big splash in public markets. Bankers told Reuters that they haven't heard back from Neiman Marcus after initial meetings regarding its IPO, which could suggest that the investors are balking at public markets.
Will he stay, or will he go? Even Square's IPO advisors can't seem to come up with an answer. But Silicon Valley rock star Jack Dorsey's second startup brainchild has been at the precipice of an IPO for some time now -- dating all the way back to 2013. It remains to be seen how the market will receive a CEO playing double-duty at two tech companies -- and it also remains to be seen when Square will make a market debut, despite signs the IPO was imminent (before Dorsey announced he would have his hands full at work).
Ticker: Nothing, yet!