Sal Morreale Comments: Five IPOs Slated For Next Week

January 8, 2013, Wall Street Journal

After hibernating for the winter holidays, a handful of companies are jumping at the chance to go public.

A burst of issuers, including two energy companies, a cruise-line operator and a data-storage company, set terms for their initial public offerings Tuesday. That means next week could bring as many as five deals in 2013’s first wave of debuts.

Market watchers said the timing of the activity is likely attributable, in part, to the relative calm on Wall Street after a compromise was struck last week in Washington debt talks.

Uncertainty about whether policy makers could scrape together a compromise to avert a series of tax increases and spending cuts helped to constrict the number of IPOs in the last weeks of 2012.

"It seems like there’s a window in the market now, so maybe issuers are tying to squeeze them in before it all starts up again," said Sal Morreale, an institutional sales trader who tracks IPOs for Cantor Fitzgerald.

The largest among the prospective offerings comes from CVR Refining LP, which owns petroleum-refining assets. The Sugar Land, Texas, company said it plans to sell 20 million common units for between $24 and $26 apiece in documents filed with the Securities and Exchange Commission. The deal could raise as much as $520 million based on the highest price estimate.

IPOs from energy-sector master limited partnerships have met strong demand of late, especially with interest rates low and investors hunting for yield. MLPs tend to be backed by assets that generate regular revenue under long-term contracts, which is paid out to investors.

"They were successful in the back half of last year. Why not bring them back?" Mr. Morreale said.

Based on cash flows through September, CVR said it would have paid $5.72 a common unit, or an annual yield of 23%, taking into account the midpoint price for the offering and its expected distribution policy.

Its units, which trade like shares, are slated to list on the New York Stock Exchange under the symbol CVRR on Jan. 17.

SunCoke Energy Partners LP, another limited partnership, said Tuesday it plans to sell 13.5 million shares at between $19 and $21 a share. The deal’s value could be as high as $284 million.

SunCoke, of Lisle, Ill., owns assets tied to metallurgical coke, a raw material used in steelmaking. The company said it plans to distribute $1.65 a unit, or 8.3%, on an annual basis. Units are expected to list Jan. 18 on the NYSE under the symbol SXCP.

Those deals join USA Compression Partners LP, which compresses natural gas for use in industry and transportation. On Monday, the company set terms for a deal valued as high as $210 million. Its units are slated to list Jan. 15 on NYSE under USAC.

Elsewhere, cruise-line operator Norwegian Cruise Line Holdings Ltd. said Tuesday it plans to launch a deal valued at as much as $423 million, offering 23.5 million shares at a price range of $16 to $18.

The company is scheduled to float shares on the Nasdaq Stock Market NDAQ +1.00% on Jan. 18., under the ticker symbol NCLH.

The Miami-based NCL is estimated to capture 7.6% of global market share in 2013 by passengers, according to industry tracker Cruise Market Watch, behind only Carnival Corp. CCL +0.31% and Royal Caribbean Cruises Ltd. RCL +1.87%

And CyrusOne Inc., the data-center business carved out from Cincinnati Bell Inc. CBB +0.39% last year, said it plans to sell 16.5 million shares to raise as much as $297 million.

The company, structured as a real-estate investment trust, owns nearly two dozen data centers. Its shares are expected to price at between $16 and $18 apiece, and to begin trading Jan. 18 on the Nasdaq, under CONE.

Next week’s deal action, if it plays out as scheduled, would account for a number of the largest deals in the IPO pipeline.

Entering this year, SunCoke, CyrusOne and CVR held the top three spots by size of expected U.S. deals, based on prospective issuers that had updated their filings over the past 180 days, according to data from Dealogic.

Separately, another hefty issuer looks to be prepping for a stock-market debut soon. Late Monday, QGOG Constellation SA, a Brazilian energy-services company, filed documents with the SEC to raise as much as $500 million through an NSYE listing, though it didn’t specify when.

The company said in its filing that it intends to use the funds to pay for two ultra-deepwater drilling vessels and other capital expenses.