July IPO activity was below average; will August outperform expectations?

17 IPOs in July raised $2.8 billion in proceeds, falling far short of the 33 IPOs that raised $8.2 billion in July 2014. Year-to-date, 121 companies have gone public in 2015, a 33% drop from the 180 that had priced through July 2014. August is not typically an active month for IPOs, however there are 13 IPOs on the calendar for the month already, as compared to the 9 IPOs in August last year.

Sectors
Health care dominated the month with 7 deals, 6 of which were biotechs. DNA interference biotech ProNAi Therapeutics (DNAI) was the best overall performer in July, returning 51%, while Alzheimer’s biotech vTv Therapeutics (VTVT) was the worst IPO of the month, dropping 27%. Consumer IPOs had a strong month, with total returns led by Blue Buffalo (BUFF; 36%) and Ollie’s Bargain Outlet Holdings (OLLI; 23%). There was one IPO in each of the communications, energy, materials, and technology sectors, and there were two IPOs in the financial sector. Ooma (OOMA), an internet telephone company, priced below its range and now trades at 21% below its offer price.  

Top IPOs
Health care and technology had the three best performers for the month of July. VC-backed Rapid7 (RPD) popped 58% in its debut, dropping slightly to a total return of 49% since its IPO. Orphan disease specialist Chiasma (CHMA) gained 25% in its first day, with a total return of 45% since. ProNAi (DNAI) priced at a 13% premium to its midpoint and popped 81% on its first day, en route to being the top returning IPO for the month. 



Bottom IPOs
Health care, communications and financial sectors were represented in the list of worst performers in July. Alzheimer’s drug developer vTv Therapeutics (VTVT) priced below its midpoint and has fallen 27% since. Low-cost internet-based phone service provider Ooma (OOMA) dropped the call, pricing below its midpoint and falling 16% in its debut. Chinese wealth management firm Jupai Holdings (JP) had a good first day, but has since dipped below its offer price, likely due to continued turmoil in the Chinese equity markets. 



Largest IPOs
The top dog in July was healthy pet food maker Blue Buffalo Pet Products (BUFF). The deal size of $677 million was just enough to be the largest IPO of July. After trading up 36% since its debut, it commands a market cap of $5.3 billion. TerraForm Global (GLBL), the yieldco spun out of SunEdison, raised $675 million at a market cap of $3.6 billion. Cancer immunotherapy biotech NantKwest (NK) raised $207 million at a $2.6 billion market cap, making it the biggest biotech IPO ever. 



Not a record amount of filings, but still plenty to look forward to in August
July saw 16 additions to the IPO pipeline, continuing a trend in healthcare companies going public. Four health care companies filed, including Global Blood Therapeutics (GBT), GenSight Biologics (GNST), Aimmune (AIMT) and Oasmia Pharmaceuticals (OASM). The largest filer in the month was the electronic commerce and payment processing company First Data (FDC.RC), which filed to raise $5 billion. Low-cost TV manufacturer Vizio (VZIO) filed to raise $173 million, and American Spanish-language media company Univision (UVN) filed to raise $1 billion. At the end of July, indoor cycling chain SoulCycle filed to raise $100 million. Four companies filed for IPOs that could raise over $1 billion each. Perhaps the most notable filing of the month, however, was Ferrari (FRRI.RC), which filed to raise what we estimate could be over $1 billion. The legendary luxury sports car maker will be spun out of Fiat. 

IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index has traded up 5.2% year-to-date, compared to 2.2% for the S&P 500. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Alibaba (BABA), Hilton Worldwide (HLT) and Twitter (TWTR). The Renaissance International IPO Index has traded up over 3.9% year-to-date, compared to less than 2.5% for the ACWX. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF Holdings include Altice and Recruit Holdings.