CM Finance (CMFN) is a specialty finance company that invests primarily in the debt of middle-market companies. 13 other companies are scheduled to IPO this week. The full IPO calendar is available at IPOpremium.com CMFN scheduled a $100 million IPO with a market capitalization of $190 million at a price range midpoint of $15 for Thursday, February 6, 2014 , on the Nasdaq Manager, Joint managers: Raymond James , Keefe, Bruyette & Woods , Oppenheimer Co-Managers: Stephens, Wunderlich Securities SEC Documents Valuation Glossary Valuation Ratios Mrkt Price / Price / Price / Price / % offered annualizing Cap (mm) Sls Erngs BkVlue TanBV in IPO CM Finance (CMFN) $191 n/a n/a 1.0 1.0 52% Compare Mrkt Price / Dividend Cap (mm) BkVlue Yield CM Finance (CMFN) $191 1.00 9.00% Apollo Investment (AINV) $1,900 1.02 9.48% THL Credit (TCRD) $536 1.20 8.60% Gladstone Capital (GLAD) $207 1.01 8.51% Conclusion Compared to AINV, TCRD and GLAD, CMFN's valuations are in range. CMFN has a higher dividend than TCRD and GLAD, but a lower dividend than AINV. The IPO rating on CMFN is neutral. Business CMFN is a specialty finance company that invests primarily in the debt of middle-market companies. CMFN seek to invest primarily in middle-market companies that have annual revenues of at least $50 million and EBITDA of at least $20 million . CMFN's investment objective is to maximize the total return to stockholders in the form of current income and capital appreciation through debt and related equity investments by targeting investment opportunities with favorable risk-adjusted returns. CMFN is an externally managed, closed-end, non-diversified management investment company that intends to file an election to be regulated as a BDC under the 1940 Act. CMFN intends to elect to be treated as a RIC under Subchapter M of the Code for U.S. federal income tax purposes. Portfolio As of September 30, 2013 , CMFN's portfolio consisted of debt and equity investments in 12 portfolio companies consisting of 54.8% first lien investments, 44.6% second lien investments and 0.6% warrant positions, at fair value. As of September 30, 2013 , the weighted average annualized yield of the debt investments in CMFN's portfolio was 11.06% as if unfunded obligations were fully funded and is weighted based on each respective investment's par amount. Recent developments In December 2013 , CMFN entered into the Stifel Arrangement pursuant to which Stifel agreed to make a capital contribution in an aggregate amount equal to the lesser of $40.0 million and 17.2% of CMFN's issued and outstanding shares of common stock after giving effect to this offering at the assumed initial public offering price per share. CMFN intends to use the investment by Stifel to repurchase up to $32.7 million of the Cyrus Funds' interest in CMFN, which will reduce the Cyrus Funds' investment in CMFN to $57.3 million assuming an offering of $100 million . CMFN does not intend to call the remaining portion of Stifel's capital commitment. CMFN refers to Stifel's investment in CMFN and the CM Finance Merger as the "formation transactions." History CMFN was formed on February 15, 2012 as a limited liability company and commenced operations in March 2012 . In March 2012 , CMFN was originally capitalized with commitments of $50 million from the Cyrus Funds, which it refers to as its initial private placement. Subsequent to CMFN's initial private placement, the Cyrus Funds increased their aggregate capital commitments to $110 million . As of September 30, 2013 CMFN had aggregate capital commitments of $110 million . Subsequent to September 30, 2013 , the Cyrus Funds increased their aggregate capital commitments to $163.6 million . As of the date of the prospectus, CMFN has called all outstanding capital commitments from the Cyrus Funds, which have been used to make investments in accordance with CMFN's investment strategy and pay for expenses of the Company. Dividends CMFN expects to pay dividends to yield 9.0% annually, at the price range mid-point of $15 , starting with a pro rata distribution for Q1 '14. Competition CMFN's primary competitors in providing financing to middle-market companies include public and private funds, other BDCs, commercial and investment banks, commercial finance companies and, to the extent they provide an alternative form of financing, private equity funds and hedge funds. Many of CMFN's competitors are substantially larger and have considerably greater financial, technical and marketing resources than CMFN does. Pre-IPO 5% stockholders Cyrus Select Opportunities Master Fund, Ltd. 63.6% Stifel Venture Corp. 36.4% Use of proceeds CMFN expects to net $95.8 million from its IPO. Proceeds are allocated as follows: to repay the Cyrus Funds Debt of $38.5 million , which CMFN incurred as part of the merger consideration paid to the Cyrus Funds in connection with the CM Finance Merger. to invest in unitranche loans and standalone second and first lien loans and selectively in mezzanine loans/structured equity and in the equity of portfolio companies through warrants and other instruments in accordance with CMFN's investment objective and for general corporate purposes.
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