Tag Archives: IPO

Mineral and royalty interests company files for IPO

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Fortis Minerals LLC, based in downtown Houston, has filed for an Initial Public Offering (IPO). Although the filing with the SEC states the company plans to raise $100 million, that is likely a placeholder. Renaissance Capital estimates the company could raise $400 million.

Fortis plans to list on the NYSE under the symbol NRI.



The company owns oil and natural gas mineral and royalty interests in the Permian Basin and the Stack play located within the Anadarko Basin of Oklahoma. The company was formed in 2016 with the backing of PE firm, Encap Investments.

For the 12 months ending 30 June 2019, the company had revenues of $138 million and adjusted EBITDA of $113.8 million.

Acquisition Joint Venture

The company also has formed an acquisition Joint Venture with Encap that could cause some conflicts of interests. Encap will own 100% of the capital interests in the JV while Fortis will own a carried interest, entitling the company to a percentage of distributions by the JV.

The JV will only consider acquisition opportunities brought to it by the company. Fortis states that the JV will only buy properties that represent attractive long-term value  but which would not be expected to increase cash flows in the short term following acquisition. However, Fortis may acquire these properties at a later date.  Encap will control the board of the JV.

The company states that they and the JV may jointly pursue an acquisition where the company would predominantly acquire interests in properties expected to be developed in the short term and the JV would predominantly acquire interests in acreage anticipated to be developed on a longer time horizon.

Management team

The CEO of the company is Christopher Transier. He was formerly the CFO of Escondido Resources. The CFO is Brad Wright. He was previously the Managing Director – M&A and Strategic Planning at Plains All American Pipeline.  With the exception of Scott Dole, Chief Accounting Officer, who is 62 years old, the rest of the management team are 36 years old or younger.

Just because the company has filed its registration statement, there is no guarantee that it will complete its IPO. If it does, I will add it to the list of Houston-area public companies. You can find that list here.

SEC filing – Fortis S-1

Contrasting fortunes for two Houston IPO’s pricing this week

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There were contrasting fortunes for the two Houston-based companies that were pricing their Initial Public Offerings this week.

Sunnova Energy International, a residential solar energy provider, priced its IPO at $12 per share.  That’s below the expected range of between $16 and $18 per share. However the company is selling the same number of shares (17.6 million). At that price, the company will raise $221 million and have a market value of $1.1 billion.  The shares will begin trading on the NYSE on July 25 under the symbol NOVA.



Castle Biosciences, based in Friendswood, priced its IPO at $16 per share. That’s at the top end of the expected range of $14 to $16 per share. Also the company also increased the number of shares on offer from 3.3 million to 4.0 million. The gross proceeds are expected to be $64 million. The shares will also begin trading on July 25, but on the Nasdaq under the symbol CSTL.

The company is a commercial-stage dermatological company that uses genomes to provide physicians and their patients with more accurate treatment decisions. The main product is a multi-gene expression profile test that predicts the risk of metastasis or recurrence for patients diagnosed with invasive cutaneous melanoma, a deadly skin cancer.

I’ve added the two companies to the list of Houston-area public companies which you can see here. However I have deleted American Midstream from the list, whose deal to go private was completed yesterday.

Sunnova IPO pricing press release

Castle Biosciences IPO pricing press release

Houston solar energy company sets terms for IPO

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Sunnova Energy International, a residential solar energy provider, has set terms for its Initial Public Offering (IPO). The company has its head office in the Greenway Plaza area of Houston.

The company filed confidentially for an IPO back in April. Its first public filing was on 27 June.



The company is offering 20% of its shares (17.6 million) with an expected price of between $16 and $18 per share. At the midpoint, that would raise $300 million, or $277 million after expenses.

$57 million of the proceeds will be used to repay convertible loan notes due March 2021 that have an interest rate of 9.5%. The rest of the money will be for general corporate purposes, primarily funding the growth of the company.

At $17 a share, the company would have a market capitalization of $1.5 billion. About a third of the 186 Houston-area public companies have a market cap higher than this. You can see the complete list on my website here.

The company is expected to price during the week of July 22, 2019

Sunnova S-1/A filing

 

Houston Biopharma company files for IPO

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CNS Pharmaceuticals, a Houston-based biopharma company has filed for an Initial Public Offering (IPO).  The company has its head office in the Galleria area.

It is the second Houston-area biopharma company to file for an IPO recently. Castle Biosciences (which does have commercial revenues) filed for a $58 million IPO last week.



The company doesn’t have any revenues yet and is developing anticancer drugs for the treatment of brain tumors. Based on preclinical data and positive results of the Phase I clinical studies conducted at MD Anderson Cancer Center, the company believes its lead drug candidate, Berubicin, could significantly help in the treatment of glioblastoma, a type of brain cancer that is considered incurable.

Berubicin was discovered at MD Anderson by Dr Waldemar Priebe, the founder of the company. Dr Priebe initially licensed the drug to Reata Pharmaceuticals. They allowed their investigative drug application with the US Food and Drug Administration (FDA) to lapse for strategic reasons.

Dr Priebe engaged a couple of experts who were on the team at Reata. As a result of reviewing the data, the company intends to restart the application.

The company is seeking to raise about $8.5 million at a share price of between $4 and $5. The money will be used to start Phase 2 trials of Berubicin, expected to cost $7 million. Dr Priebe owns 67% of the company

The CEO, and only full-time employee, is John Climaco who joined the company in September 2017. He was previously the CEO of a biopharma startup. The CFO is Matthew Lourie, who is providing services on a part-time, consulting basis.

SEC filing

Houston solar company files for IPO

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Sunnova Energy International, a residential solar energy provider, has filed for an Initial Public Offering (IPO). The company has its head office in the Greenway Plaza area of Houston.

The company leases rooftop solar energy systems to residential customers usually in the form of a 25-year lease. Customers get the benefit of cheaper electricity costs while the company retains ownership of the system, allowing it to claim federal tax credits.



$1 billion market cap?

Two weeks ago, Reuters reported that the company was planning an IPO that would value the company at $1 billion. In the current SEC filing there is no indication of the number or price of the shares being sold.

History

The company CEO is John Berger. He worked for Enron and founded residential solar energy company SunCap Financial in 2010. He sold that business to NRG Energy before starting Sunnova in 2012. The company is primarily backed by Energy Capital Partner, a PE firm that has raised over $13 billion in funds since 2006. They also led a consortium to take Calpine private in a $5.6 billion transaction in 2018.

For the 12 months ended 31 March 2019, the business had revenues of $111 million and adjusted EBITDA of $44.6 million. The company has 63,000 customers in 20+ states and territories. However, most of its revenue comes from customers in New Jersey (29%), California (26%) and Puerto Rico (14%).

Revenue grew by 35% in 2018 and the company expects the number of residential solar energy systems in the overall US market to increase from 2.2 million in 2018 to 5.4 million in 2024, a 16% compounded annual growth rate.

Problems in Puerto Rico

The business in Puerto Rico is causing some operational heartache. In September 2017, hurricanes Irma and Maria made landfall, resulting in;

  • damage to many of the company’s solar energy systems.
  • damage to Puerto Rico’s electrical grid. This meant that those solar energy systems that didn’t have a battery back up operated at a reduced capacity, even though the system itself was not damaged.
  • residents leaving the island, and suspending lease payments to the company.

In addition regulators in Puerto Rico have started administrative proceedings against the company after finding that it had enrolled 436 customers illegally by attaching signatures to contracts they hadn’t signed.  Sunnova disputes the findings but is unable to state what impact this might have on the business.

New CFO

The CFO of Sunnova is Rob Lane. He joined the company a month ago, from Spark Energy. The previous CFO, Jordan Kozar, left in November 2018.

The company plans to list on the NYSE under the symbol ‘NOVA’. BofA Merrill Lynch, J.P. Morgan, Goldman Sachs and Credit Suisse are the joint bookrunners on the deal.

The filing comes a day after another Houston company, Castle Biosciences, filed for an IPO.

SEC filing

 

 

Houston Biotech company files for IPO

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Castle Biosciences, based in Friendswood, has filed for a $58 million Initial Public Offering (IPO). The company is a commercial-stage dermatological company that uses genomes to provide physicians and their patients with more accurate treatment decisions.

The company’s main product is a multi-gene expression profile test that predicts the risk of metastasis or recurrence for patients diagnosed with invasive cutaneous melanoma, a deadly skin cancer.



The company was founded in 2007 by CEO Derek Maetzold. He has held leadership roles in a number of pharmaceutical companies. He has also contributed to the discovery and development of five diagnostic tests in cancers.

Before the offering, Mr Maetzold owns 18% of the shares of the company while four other venture firms own almost 50% of the company.

The Chief Medical Officer is Federico Monzon, MD. He previously served as the Director of Pathology at the Cancer Genetics Laboratory of the Baylor College of Medicine in the Texas Medical Center.

The CFO is Frank Stokes who joined the company in December 2017 from Hammock Pharmaceuticals in Charlotte, NC. Previously he had worked for SVB Leerink, an investment bank that specializes in healthcare.

In 2018, the company had revenues of $23 million and an operating loss of $3.8 million. This was after incurring Research and Development costs of $4.9 million.

The company intends to use $17 million of the proceeds of the IPO to expand its sales force. It also plans to spend the same amount on R&D, with the remainder used for working capital needs.

The company plans to list on the Nasdaq under the symbol CSTL. No pricing terms were disclosed.

SVB Leerink and Baird are the joint bookrunners on the deal.

The company joins dozens of biotech companies that have recently filed for IPOs. However, if the company goes public, it will be only the third Houston-based company to do so this year. The first was Soliton, a tattoo removal business, in February. The second was Tilman Fertitta’s blank check company in May

SEC filing

 

 

Firtitta blank check company upsizes IPO

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Landcadia Holdings II, a blank check company owned by Tilman Fertitta has completed its Initial Public Offering (IPO). It ended up raising $275 million, up from the $250 million originally anticipated.

The stock will begin trading on the Nasdaq on May 9, 2019.



Currently Mr Fertitta owns 51.7% of Landcadia II through Fertitta Entertainment, Inc (FEI) with the remaining amount owned by Jefferies, an investment banking firm.

The same duo launched a similar IPO nearly 3 years ago. Landcadia Holdings (Landcadia I) went public after raising $250 million. In November 2018, Landcadia I acquired Waitr Holdings for $308 million. Waitr is based in Lake Charles and specializes in online delivery from local restaurants to at-home customers. It primarily serves secondary markets and has a current market capitalization of $642 million.

Press release

By my reckoning that makes 187 publicly-traded companies that have their head office in the greater Houston area. You can see the complete list here.

Tilman Fertitta launches another Blank Check IPO

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Tilman Fertitta is launching another Blank check company, Landcadia Holdings II, that is proposing to raise $250 million through an Initial Public Offering (IPO).

Currently Mr Fertitta owns 51.7% of Landcadia II through Fertitta Entertainment, Inc (FEI) with the remaining amount owned by Jefferies, an investment banking firm.

FEI has revenues of over $4 billion. It owns 500 restaurants such as Morton’s, McCormick & Schmick, Saltgrass Steakhouse and Rainforest Cafe. It also owns Golden Nugget Casinos in Las Vegas and other locations. Other assets owned by FEI include the Houston Rockets (acquired for $2.2 billion), the Post Oak Hotel in Houston and the Kemah Boardwalk.



Landcadia I acquires Waitr

The same duo launched a similar IPO nearly 3 years ago. Landcadia Holdings (Landcadia I) went public after raising $250 million.

In November 2018, Landcadia I acquired Waitr Holdings for $308 million. Waitr is based in Lake Charles and specializes in online delivery from local restaurants to at-home customers. It primarily serves secondary markets and has a current market capitalization of $769 million. It recently acquired BiteSquad.com for $321 million. Mr Fertitta still owns 7.3% of Waitr.  After its acquisition, Waitr partnered with the various restaurant chains in the FEI group to drive revenue growth.

Blank Check companies

A blank check company, also called a SPAC (Special Purpose Acquisition Company) is a publicly listed company with no operations that raises money from investors for acquisitions via an IPO.

According to the S-1 filing, Landcadia II intends to focus on ‘business combination targets in the consumer, dining, hospitality, entertainment and gaming industries including technology companies operating in these industries.’ The words in italics are my emphasis as it represents a change from the wording used in the filing for Landcadia I.

There are two other publicly-traded blank check companies based in Houston. Graf Industries went public in October 2018. Sentinel Energy went public in November 2017 but recently called off its merger with Strike LLC.

SEC filing – Landcadia Holdings II

Houston company planning IPO sold for $1.2 billion

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Ipsco Tubulars, a pipe maker that was planning an Initial Public Offering, has instead been sold to Tenaris, which has its head office in Luxembourg, for $1.2 billion.

Ipsco has its head office in NW Houston and is subsidiary of PAO TMK, a Russian company. TMK bought the assets of IPSCO for $1.7 billion through a two-part transaction in 2008 and 2009.

IPO postponed in Feb 2018

Ipsco originally filed for an IPO in January 2018. It had planned to raise $500 million by offering 23.3 million shares at a price range of $20 to $23. That would have valued the company at $1.3 billion. Unfortunately, on the day they were due to price in February 2018, the Dow fell 1,000 points and they postponed the IPO.

In December 2018, they updated their prospectus with the aim of trying again. They hadn’t yet filed revised terms before the announcement by Tenaris.



Acquisition by Tenaris

Tenaris was virtually no presence in Texas until it bought St Louis-based Maverick Tube for $2.4 billion in 2006 and Houston-based Hydril for $2.1 billion the following year.

For the nine months ended September 30, 2018, Ipsco had revenues of $1.1 billion and adjusted EBITDA of $124 million. Both of those numbers are up 50% on the corresponding period in the previous year.

Tariffs and local competition changed the dynamics

The 25% tariffs imposed by President Trump on imported steel enabled Ipsco to raise prices to its customers. Its primary material input for its seamless steel pipe is steel scrap. Prices for scrap were not significantly affected by the tariffs, allowing Ipsco to expand margins. However, the tariffs caused Ipsco to reduce imports sourced from its Russian parent.

Tenaris recently completed a new $1.8 billion pipe mill in Bay City and thus increased its local competition to Ipsco. For these reasons, it appears the parent company decided they were better off selling Ipsco than going through with the IPO.

http://ir.tenaris.com/news-releases/news-release-details/tenaris-acquire-ipsco-tubulars-tmk

 

Houston offshore E&P company files to go public

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EnVen Energy Corporation, a company that is engaged in exploration and production in deepwater Gulf of Mexico, has filed for an Initial Public Offering (IPO). The company has its head office in downtown Houston.

The company was formed in July 2014 with backing from Bain Capital. The company was primarily built on two acquisitions. In  December 2015 the company acquired the Lobster and Pretronius assets from Marathon for $105 million and one year later, it paid Shell $239 million for the Brutus and Glider properties.

For the 12 months ending June 30, 2018, the company had revenue of $524 million. It produces 29,000 barrels of oil equivalent (boe) per day and has 56 million boe proved reserves.

The IPO states that the company is planning to raise $100 million, though that number is a placeholder. It is planning to use the proceeds, primarily, to repay its $325 million senior loan notes (11%) that it issued in February 2018.

The CEO since the company was formed is Steven Weyel. He was the COO of Energy XXI from 2005-2010. The CFO is John Wilkirson who was the CFO of Cobalt International from 2010-2015.

Citigroup, JP Morgan, Stifel and BMO Capital Markets are the underwriters.

If the company completes its IPO it would be the first Houston-area E&P company to go public in 18 months.

 

SEC filings