The new live deals include animal health company Phibro Animal Health (US$211.8m), “human capital management” software-as-a-service provider Paycom Software (US$132.9m), restaurant chain Zoe’s Kitchen (US$75.4m), oncology company Cerulean Health (US$65m) and UK-based medtech company Lombard Medical (US$64.8m).
The deals add to the 15 US IPOs already on the road, including eight due to price this week. This week’s biggest deals include the US$1.3bn IPO of healthcare data company IMS Health, while next week brings the long-awaited US$2.7bn IPO of auto financier Ally Financial.
Several of last week’s IPOs, most notably King Digital Entertainment, opened below their offering price last week, a reversal of the generally strong aftermarket performance seen by most IPOs in recent months. Even so, equity markets remain strong and are trading close to record levels, while volatility levels are relatively low.
Paycom, founded by chief executive Chad Richison in 1998 after a career at ADP, provides a software that helps businesses manage talent acquisition, time and labour management, payroll, talent management and human resources.
The company last year generated revenues of US$107.6m, a gain of 40%, and net income of US$7.7m. Gross margins are high at 81%, though this is not unusual for a software company.
Paycom expects to price its IPO on April 10. Barclays and JP Morgan lead a five-firm underwriting syndicate.
It plans to sell 6.7m shares at US$18-$20 each. The offering includes 4.6m new shares and 2m offered by selling shareholders, mainly interests associated with majority shareholder Welsh, Carson, Anderson & Stowe, a private equity firm with US$20bn under management. The primary proceeds will be used to repay a 10% senior note issued to WCAS and a 14% note assumed as part of the company’s reorganisation.
The IPO values Paycom at up to US$1bn, implying a relatively high multiple relative to recent software IPOs growing at a similar pace and with a similar level of revenues.
The deal follows closely behind the successful IPO earlier this month of Paylocity and the highly successful 2012 IPO of Workday. Cited competitors include Cornerstone OnDemand, Oracle, SAP and Workday as well as ADP, Paychex, Ceridian Corporation and Intuit.
