Tag Archives: IPO

Houston Biopharma company files for IPO


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

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

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

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

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

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

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

Houston blank check company files for $225m IPO

Graf Industrial, a blank check company based in NW Houston, has filed for an Initial Public Offering (IPO). The company plans to raise $225 million by offering 22.5 million units at a price of $10.

Graf was formed earlier this year by blank check veteran James Graf. It intends to buy an industrial business in the US or Canada worth $1 billion. Mr Graf has served as a founder and executive officer or director of 4 special purchase acquisition companies (SPAC). They have raised $1.3 billion in their initial IPOs over the past 8 years. In his most recent deal, Mr Graf’s blank check company acquired Williams Scotsman, a business providing modular space solutions, for $1.1 billion.

The CFO of the company is Michael Dee. He spent a lot of his early career at Morgan Stanley in both Houston and Southeast Asia. Most recently Mr Dee was a Senior Advisor to the President for Finance of the Asian Infrastructure Investment Bank in Beijing.

The principal stockholder or sponsor is an investment vehicle owned by Mr Graf, Mr Dee, Owl Creek (a hedge fund) and other investors that have had a long-standing relationship with Mr Graf.

EarlyBird Capital and Oppenheimer & Co are the joint bookrunners on the deal. The company plans to list on the NYSE under the symbol GRAF.U.

If the company completes its IPO it will end a barren run for Houston-area businesses. The last completed IPO was Spirit of Texas Bank, back in May. Nationally, Renaissance Capital predicts that the amounts raised through IPO’s in 2018 is on pace to be the 2nd largest in the last 15 years, behind only 2014.

SEC filing

Houston oilfield equipment manufacturer announces terms for IPO

AFG Holdings Inc, the parent company of Ameriforge, has announced terms for its Initial Public Offering (IPO). AFG has its headquarters in the Memorial City area of West Houston.

The company plans to raise $300 million by offering 18.2 million shares at a price range of $15 to $18. At the midpoint of the range, the company would have a market value of $1.3 billion.

The IPO is expected to price during the week of July 16, 2018. [UPDATE: The company pulled its IPO on July 18. No reason was given]

Most of the proceeds would go to the selling shareholders and not the company. At the midpoint, the company expects to receive $82 million (net of expenses), of which $73 million would be used to pay down a term loan that has a 10.7% interest rate.

Ameriforge manufactures highly-engineered equipment for the oil and gas market and industrial markets such as pressure pumping equipment, offshore drilling systems and connectors.

The company was formed in 1996 and in 2012 was acquired by First Reserve, a private equity firm. The company expanded rapidly, growing to 25 locations (including many internationally) but became over-stretched after the energy services downtown. In April 2017 the company entered into pre-packaged bankruptcy proceedings that converted $739 million of senior debt into equity in the new company.  As a result the company received new equity sponsors led by The Carlyle Group.

For the first quarter of 2018, the company had revenues of $171 million and adjusted EBITDA of $26 million (15.3%)

 

Houston oilfield equipment manufacturer files for an IPO

AFG Holdings Inc, the parent company of Ameriforge, has filed for an Initial Public Offering (IPO). AFG has its headquarters in the Memorial City area of West Houston.

Ameriforge manufactures highly-engineered equipment for the oil and gas market and industrial markets such as pressure pumping equipment, offshore drilling systems and connectors.

The company was formed in 1996 and in 2012 was acquired by First Reserve, a private equity firm. The company expanded rapidly, growing to 25 locations (including many internationally) but became over-stretched after the energy services downtown. In April 2017 the company entered into pre-packaged bankruptcy proceedings that converted $739 million of senior debt into equity in the new company.  As a result the company received new equity sponsors led by The Carlyle Group.

For 2017, the company had proforma revenues of $441 million and adjusted EBITDA of $46 million.

Since June 2015, the CEO of the company has been Curtis Samford. He joined the company in 2012. The CFO is Lawrence Blackburn who joined in December 2017. He was formerly the CFO at Goodman Global.

No pricing details were disclosed. The company said it would be raising up to $100 million and would be using most of the money raised to pay off the outstanding term loan ($71 million at December 2017).