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This week won't be a big one for initial public offerings, which is a little out of character for such a busy year. According to the latest figures from IPO specialists Renaissance Capital, as of the end of February 55 filings for new stock issues have been submitted. That's not far from triple the amount (21) at the same point in 2013. Actual flotations, meanwhile, have nearly doubled to 37 from the 20 of January-February 2013.
The IPO pipeline will continue to flow, albeit relatively thinly, over the next few days. As with last week, the next few days will see two market debuts -- a firm in the consumer sector (Coupons.com) and one financial stock (TriplePoint Venture Growth BDC).
Before tucking in to this week's meal, however, we have to warn that IPO investing carries above-average risk. That's because initial stock prices can be far from the value the market eventually puts on the company's shares. Of course, this situation provides immense upside potential ... though it also presents the chance of losing a big chunk of an investment.
Anyway, on to our duo for this week.
TriplePoint Venture Growth
Business development companies are an interesting play in the financial sector. They function very much like venture capital funds, lending money to small- and mid-sized businesses and profiting on the interest and/or taking equity stakes in return. What's perhaps most appealing about BDCs is that they're required to pay out at least 90% of their gross annual income to their shareholders. TriplePoint Venture Growth, founded by the brain trust behind VC outfit TriplePoint Capital, says it aims to dispense $0.30 to $0.34 per share for the quarter ended March 31, so investors who pounce on the IPO won't have to wait very long to see a return.
If those folks can score shares at the proposed market price of $15, they'll be set for a dividend yield of 8% to 9.1%. This puts TriplePoint VG a bit on the low side of prominent BDCs trading actively on the exchange. Although that range is in the neighborhood of Ares Capital's (NASDAQ: ARCC ) 8.4%, Fifth Street Finance (NASDAQ: FCS ) and BlackRock Kelso (NASDAQ: BKCC ) both trade at over 10%. But it's early days, and if TriplePoint VG's IPO funds are effectively channeled toward productive investments, that yield figure will start to rise.
Just over 8.3 million shares of the BDC are slated to begin trading Thursday on the New York Stock Exchange under the ticker symbol TPVG. The company is being brought to market by Goldman Sachs (NYSE: GS ) , Morgan Stanley, Wells Fargo Securities, Credit Suisse, and UBS Investment Bank.
Who doesn't like saving money? This company is hoping the answer is "nobody." It makes its coin by providing a platform upon which retailers and consumer packaged goods companies offer digital coupons to their customers. Last year, the company says, it distributed 315 billion coupons for a total discount value of $510 billion across more than 2,000 different brands. Revenue has grown at a captivating rate, from just over $40 million in 2009 to more than four times that amount last year. Bottom line, however, has been consistently in the red since that time, most recently amounting to $11.2 million in fiscal 2013. But the business model is straightforward and compelling, and the firm's four underwriters include financial strongmen Bank of America (NYSE: BAC ) Merrill Lynch and Goldman Sachs.
Coupons.com shares are scheduled to start trading on Friday on the NYSE under the symbol COUP. An even 10 million shares are to be sold at a price of $12 to $14 apiece.
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