Now this is a frothy market. This week will be fat with initial public offerings; 14 are slated to hit the exchange, a tally that tops even last week's chunky total of nine. Out of that 14, three are a threat to break the scales, with a potential take of at least $500 million each from their listings. It's going to be a busy few days on the IPO market, folks, so hang on for a memorable ride.
A warning before we begin, though: IPO investing carries above-average risk, since initial stock prices can be far from the value the market eventually puts on the company's shares. This situation provides immense upside potential, but it also opens the possibility of losing a big chunk of an investment.
Thanks for absorbing our public service announcement. Now, on to the selections for the week:
La Quinta Holdings
Financial-services player Blackstone Group (BX) is continuing to check out of the hotel sector. Since late last year it's been shedding some of its well-known hospitality holdings through IPOs, namely Extended Stay America in November, and Hilton Worldwide the following month. This week it'll be budget hotel chain La Quinta's turn, and the issue should attract interest because of the company's size (more than 830 lodgings around the U.S.) and revenue growth, although the company hasn't been consistently profitable over the past few years.
La Quinta Holdings is being brought to market by an underwriting consortium led by JPMorgan Chase (JPM -0.96%) unit J.P. Morgan and near-namesake Morgan Stanley (MS -1.87%). A total of 37.2 million shares will be up for sale starting Wednesday at a price of $18 to $21 per share, and the stock should trade on the New York Stock Exchange under the ticker symbol LQ.
Even in this hot IPO market, it's rare for a bank to float a new issue. It's even rarer for a bank of this size. Ally Financial is the successor firm to automobile financing house GMAC and over the years has widened its offerings to include many of the services expected of big lenders. According to the firm, it's the 19th largest bank holding company in the U.S. in terms of total assets ($151 billion as of the end of 2013). Making this IPO a bit different is the entity selling all of the shares -- the Department of the Treasury, which through the TARP initiative bailed out the firm (then still GMAC) during the dark days of the financial crisis, to the tune of over $17 billion.
An eye-popping 95 million shares of Ally Financial should hit the market Thursday, trading on the NYSE and bearing the very appropriate ticker symbol of ALLY. The price range is $25 to $28 per share. The issue's "joint global coordinators" are Citigroup (C -1.89%), Goldman Sachs (GS -0.71%), Morgan Stanley, and Barclays.
Enable Midstream Partners
The shale energy boom shows few signs of abating, with plenty of business to be had for entities that have their fingers on strategic plays. Enable Midstream Partners is one of those, with a big presence in three large reserves spread across four U.S. states. As long as the world continues to be thirsty for energy, oil and gas partnerships should do just fine. Enable Midstream Partners seems like a safe bet on the sector -- it's run by industry veterans and has been well and reliably in the black across the last few years.
The partnership is slated make its debut on the NYSE Friday, under the ticker symbol ENBL. The units, 25 million of which are coming to the exchange, should start trading at $19 to $21 apiece. Morgan Stanley, Barclays, and Goldman Sachs are the lead underwriters.