Carlyle Group L.P. (CG), Alternative investment manager
Based in Washington, DC, Carlyle Group (proposed CG) scheduled a $732 million IPO with a market capitalization of $7.3 billion at a price range mid-point of $24 for Thursday, May 3, 2012.
$500 million of debt to be repaid from IPO funds was incurred from the sheikdom of Dubai, originally in December, 2010 to pay cash dividends to CG shareholders. If CG is so great why did Dubai force a repayment in March, 2012 a month or so before CG’s IPO to repay the re-financed debt?
Carlyle says it will IPO at a discount to other alternative investment managers, based on Carlyle producing $862 million in distributable earnings for 2011. Those earnings, however, cannot be considered recurring in any way, and probably were goosed up for the IPO.
EverBank Financial (EVER), Bank
Based in Jacksonville, Florida, EverBank Financial (proposed EVER) scheduled $328 million IPO with a market capitalization of $1.5 billion at a price range mid-point of $13 for Thursday, May 3, 2012.
EVER is a diversified financial services company with an Internet portal. Regarding competition, EVER notes that many of its competitors have fewer regulatory constraints and may have lower cost structures.
Beginning in the third quarter of 2012, EVER intends to pay a quarterly cash dividend of $0.02 per share, an annual rate of 8 cents, which is a token .6% return at the price range mid-point of $13.
Pacific Coast Oil Trust (ROYT)
Based in Austin, Texas, Pacific Coast Oil Trust (proposed ROYT) scheduled a $350 million IPO with a market capitalization of $772 at a price range mid-point of $20 for Thursday, May 3, 2012. ROYT expects to sell 45% of the company on the IPO – that’s a relatively high percentage and is not a plus.
ROYT is a combination of two very old producing properties in California, with 98% oil in reserves.
For example, one of the properties, The Los Angeles Basin, has produced more than nine billion Bbls of oil since its discovery in 1892.
9% payout (at the estimated price range mid-point of $20) for the 12 months ending May, 2013. But there is only a 17 year life left for proved reserves.
PetroLogistics LP (PDH), Propylene plant
Based in Houston, Texas, PetroLogistics LP (PDH) scheduled $700 million IPO with a market capitalization of $2.78 billion at a price range mid-point of $20 for Thursday, May 3, 2012.
Built an independent plant to process propane into propylene. Began operations in October 2010 and, after a year-long start-up and plant optimization phase, achieved production rates at or near current capacity beginning in December 2011.
PDH expects to make a $2.20 cash distribution for the 12 months ending June 30, 2013, which is an 11% payout at the price range mid-point.
The payout is based on a forecasted 30% net profit margin, which is not sustainable in a commodity business, because customers and competitors are highly motivated to increase supply by building their own plants.
SPECIALTY TEEN RETAILER
Based in Irvine, California, Tilly’s (proposed TLYS) scheduled a $100 million IPO with a market capitalization of $245 million at a price range mid-point of $12.5 for Friday, May 4, 2012. TLYS plans on selling 41% of the company on the IPO, which is a relatively high percentage, and is a negative.
TLYS is a ‘west coast’ teen apparel specialty retailer. Earnings peaked at $24mm in 2008, then dropped to $21 million for 2011. TLYS is priced at 12 times 2011 earnings, which is at the bottom of the profitable companies in the sector.
HOLDOVER FROM LAST WEEK
Based in Rockville, Maryland, Supernus Pharmaceuticals (proposed SUPN) re-scheduled a reduced price $55 million IPO with a market capitalization of $125 million at a price of $5 for Tuesday, May 1, 2012.
The mid-point of last week’s price range was $13.
SUPN is a specialty pharmaceutical company with product candidates for epilepsy & Attention Deficit Hyperactivity Disorder ADHD, with lots of competition in both product segments.