The IPO market is about to face its biggest test of the year

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Courtesy of Spartan Race

Two of the biggest initial public offerings to hit Wall Street this year are pricing their shares Wednesday night.

They could make or break the IPO market for the rest of 2015. Neither of these deals is terribly exciting, but both are big. First Data, a global payments processor, is looking to raise over $3 billion. It plans to use the money to repay debt. Albertsons, the supermarket chain, is asking investors for almost $2 billion. Neither company is incredibly exciting either, but both are leaders in their respective markets. So if they’re successful, they could ease the way for other companies looking to tap investor demand.

“If this new IPO class is received well by the market, it should create a virtuous circle of confidence, and bring other issuers out of the woodwork,” said Jeffrey Nassof, vice president of consulting services at Freeman & Co.

The IPO market could use a boost right about now. Proceeds raised in US IPOs are down more than 44% from last year, and the number of deals is down by about 20%, according to Renaissance Capital, which analyzes initial public offerings.

And it’s not just that there has been a dearth of offerings. If the market isn’t receptive to newly listed shares, that could discourage IPO investors looking for a quick profit. Last week, the flash-storage provider Pure Storage fell in its trading debut, ending its first day of trading below its private-market valuation.

“When you price things very aggressively in the private market, it’s not rational to expect them to pop in the public market,” said Lise Buyer, an IPO consultant with Class V Group in Silicon Valley.

Buyer is reluctant to call Pure Storage’s IPO bad news for the tech sector. The company did, after all, raise more than $400 million in new capital. But she is equally unsure that other tech IPOs will come flowing down the pipeline this year.

Here’s what’s on schedule for this week, and beyond:


Leading off in the IPO lineup is the grocer Albertsons

The supermarket chain Albertsons, which recently completed a merger with Safeway, is expected to price shares Wednesday at $23 to $26 a share. The company will sell nearly $2 billion in stock, all of it to pay down debt from its acquisition of one of its biggest competitors, which closed earlier this year. This would give the Boise, Idaho-based company a valuation of more than $12 billion at the top of its range.

Ticker: ABS


First Data will first pare down debt after its mega-IPO

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KKR boss Henry Kravis.
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Getty Images/ Kevork Djansezian

Also expected to make its market debut on Thursday is the private-equity backed First Data Corp., a precrisis tech buyout from the private equity firm KKR. The Atlanta-based tech company will debut on public markets selling nearly $4 billion worth of stock – all of it to pay down loans that came as part of its buyout just over eight years ago. After how poorly KKR’s biggest buyout, TXU Corp., fared, this deal has a great deal of importance to the private-equity firm and its remaining founders.

Ticker: FDC


The roadster maker Ferrari is lining up an IPO for mid-October.

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A vintage Ferrari.
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Ferrari Facebook

The luxury-sports-car maker Ferrari is revving its engine for a big market debut that could value the company at up to $10 billion. The company will sell shares in the $48 to $52 range and will unload $900 million in shares at the offering, expected to price on October 20. Why IPO now? The company is owned by Fiat Chrysler, which has seen a massive appreciation in its shares since its own market debut in late 2014.

Ticker: RACE


Neiman Marcus is in IPO limbo, according to one report

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A Neiman Marcus store in Boston.
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Wikipedia/John Stephen Dwyer

The high-end retailer Neiman Marcus once had investment bankers excited for a big public offering after the company traded hands between private-equity investors after its 2005 leveraged buyout. But now the new owners, Ares Management and a big Canadian pension, apparently have cold feet about making a big splash in public markets. Bankers told Reuters they hadn’t heard back from Neiman Marcus after initial meetings regarding its IPO, which could suggest that the investors are balking at public markets.

Ticker: NMG


SoulCycle looks to take its cult following to public markets

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A SoulCycle class.
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REUTERS/Shannon Stapleton

SoulCycle earlier this summer filed to make its market debut, and since then no news has been heard from the mega-fitness brand. But SoulCycle’s growth and revenue (now in excess of $100 million) might be enough to lure investors desperately seeking growth and better returns into a fourth-quarter roadshow.

Ticker: Nothing, yet!


Jack Dorsey’s return to Twitter could put Square’s IPO off (yet again)

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Dorsey at an event last year in San Francisco.
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Kimberly White/Getty Images for Vanity Fair

Will he stay, or will he go? Even Square’s IPO advisers can’t seem to come up with an answer. But the second startup brainchild of Silicon Valley rock star Jack Dorsey has been at the precipice of an IPO for some time now – dating all the way back to 2013. It remains to be seen how the market will receive a CEO playing double-duty at two tech companies – and it also remains to be seen when Square will make a market debut, despite signs the IPO was imminent (before Dorsey announced he would have his hands full at work).

Ticker: Nothing, yet!