Private Equity Insiders Quickly Selling Out of Recent IPOs
Private equity backers are generally eager to take profits when they can, particularly after they have brought a portfolio company back to the stock market. After all initial public offerings (IPOs), an insider lockup period exists that prevents a flood of shares from coming on to the stock market all at once. We have three such post-IPO companies with which shares are down as a result of private equity firms lining up to sell their shares.
Berry Plastics Group Inc. (NYSE: BERY) has filed to sell 15 million shares tied to Apollo Funds, which owns more than 49.5 million shares. Shares are down 5.6% at $21.00, against a post-IPO range of $13.12 to $24.27. This is close to $315 million in proceeds based on current prices.
Boise Cascade Co. (NYSE: BCC) filed to sell 10 million shares for insiders, or up to 11.5 million if the overallotment option is exercised in full. This is tied to Madison Dearborn, and the fund owns some 29.76 million shares prior to the sale of these shares. Shares are down 1.6% at $27.95, and the post-IPO range is $24.90 to $34.54. This one comes to almost $280 million based on current share prices.
Del Frisco’s Restaurant Group Inc. (NASDAQ: DFRG) is selling 5 million shares for Lone Star Management, tied to John P. Grayken. Shares fell 7% to $20.94 on the news, as the average daily volume is now only about 115,000 shares. Its post-IPO trading range is $11.73 to $23.22. This is more than $100 million based on current prices.
None of these sound like much on the surface. What you have to consider is that when you combine the three, you are sending back some $700 million back to private equity backers without considering any overallotment options.