Fenix Parts Files for IPO

Fenix Parts Inc. filed for its initial public offering (IPO) with the U.S. Securities and Exchange Commission (SEC). No terms were given in the filing, but the offering is valued up to $100 million. The stock will list on the Nasdaq Global Market under the symbol FENX.

The underwriters and joint book-running managers for the offering are BMO Capital Markets and Stifel.

Fenix Parts is a recycler and reseller of original equipment manufacturer (OEM) automotive products. Fenix was founded in January 2014 to combine eight founding companies and create a network that offers sales, fulfillment and distribution in key regional markets in the United States and Canada. The founding companies have been in business an average of 25 years and operate from 13 locations.

The primary business is auto recycling, which is the recovery and resale of OEM parts, components and systems reclaimed from damaged, totaled or low value vehicles. Customers include collision repair shops, mechanical repair shops, auto dealerships and individual retail customers.

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Upon receipt of vehicles, which Fenix primarily purchases at auto salvage auctions, the company inventories and then dismantles the vehicles and sell the recycled components. It also generates a portion of revenue from the sale of aftermarket parts, and from the sale as scrap of the unusable parts and materials.

Customers include collision and mechanical repair shops, auto dealerships and individual retail customers. In 2014, this customer base exceeded 10,000 customers, with no single customer accounting for more than 1% of combined revenue.

According to the filing:

The aggregate consideration to be paid by Fenix in the Combinations, subject to adjustment and including, among other things, amounts held in escrow, amounts payable as bonuses and amounts payable for the reimbursement of certain capital expenditures by certain Founding Companies, consists of approximately $93.2 million in cash, approximately 2.8 million shares of common stock, assuming a public offering price of $10.00 or more, and approximately 1.2 million exchangeable preferred shares of our subsidiary, Fenix Parts Canada, Inc., assuming a public offering price of $10.00 or more (collectively, the “Combination Consideration”).

The principal purposes of this offering are flexibility in the future, including to acquire additional automotive recycling businesses, either with the net proceeds from this offering or through the publicly traded common stock it creates through this offering. Fenix also mentioned that it intends to use an aggregate of approximately $93.2 million of the net proceeds from this offering to pay the cash portion of the combination consideration in the combinations with the founding companies.

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