The largest IPO of the year opened the door for 3 more deals this week

Bats Global Markets’ successful initial public offering last week may have given the market just what it needed to get going again.

That deal when off without a hitch. It priced at the top of its range on Thursday night and promptly traded up on Friday. It was the largest IPO of the year, raising upward of $250 million.

The consensus in its aftermath is that Bats’
solid performance should reassure investors who have shied away from IPOs in recent months. It should also prompt other companies mulling an offering to seriously consider making their move.

Now that just may be happening.

Three companies are lined up to go public this week, raising some $1.3 billion in total, according to Renaissance Capital’s IPO Center. Of note, Bank of America Merrill Lynch is on all three of the deals this week.

  • MGM Growth Properties, a REIT being carved out of MGM Resorts with a portfolio of 10 gaming properties, is set to raise $975 million, according to Renaissance Capital. It is expected to price between $18 and $21 per share.

    Advisors: Bank of America Merrill Lynch, JPMorgan, and Morgan Stanley.

  • American Renal Associates Holdings, a provider of kidney dialysis services, is set to raise $161 million, pricing between $20 and $23 a share.

    Advisors: Bank of America Merrill Lynch, Barclays, and Goldman Sachs.

  • SecureWorks, a data security-focused subsidiary of Dell Inc., is set to rase $149 million, with shares expected to price between $15.50 and $17.50 each.

    Advisors: Bank of America Merrill Lynch, Morgan Stanley, and Goldman Sachs.

IPO activity last quarter hit its lowest level since the first quarter of 2009. In fact, Bats was only the tenth IPO of the year in the US.

The nine IPOs that took place in the first quarter raised a total of $1.2 billion, according to Dealogic. That’s down from 33 deals worth $5.5 billion in the same period last year and 59 deals worth $10.1 billion in the same period in 2014.

Higher market volatility in late 2015 and early 2016 had IPO investors like hedge funds and mutual funds spooked, and unwilling to take a risk on an untested stock.

But more recently, the stock market has been in recovery, and investors have begun to look for opportunities. The problem more recently has been a lack of supply, rather than a lack of demand, according to people who have attended recent roadshows.

Now that Bats has made the initial leap, it looks like that supply could be coming back.

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