Our Passion for IPOs
Largest Global IPOs
Largest US IPOs
Largest US IPOs YTD
Largest US Internet IPOs
Top First Day Returns
US IPO Stats
IPO Average Age
IPO Industry Breakdown
Offer Price Discounts
Global IPO Stats
IPOs by Region
IPO Industry Breakdown
Press Contact Form
Register for IPO Updates
Follow us on g+
Like us on Facebook
Follow us on LinkedIn
Free iPhone App
Free Android App
IPO News Feed
IPO News Archive
New Ways to Invest in IPOs - IPO ETFs
A buyers' market for US IPOs?
Analyst IPO Blog
Despite three straight weeks of gains among broader equity markets, US IPO investors pushed hard for discounts in the last wave of deals before Labor Day.
Three deals priced
more than a dollar below the range; the fourth, Peregrine Semiconductor (
), priced at the low end in spite of hockey-stick forecasted growth; and two more were postponed. The $567 million raised this week was 45% less than the more than $1 billion expected, which would have made it the biggest week since Facebook.
As in the week before, the
paid off: Bloomin' Brands (
) and Peregrine rose 17% and 6%, respectively, in their first three days of trading, and Performant Financial (
) gained 18% in its first day. While the largest and highest profile deal, soccer franchise Manchester United (
), traded flat in its debut, it was forced to cut its price by 22% just to get out of the door. Since July 24, ten of eleven deals have priced at the low end or below their anticipated ranges, but only two have produced negative returns.
While the widespread discounting indicates a buyers' market, many of the recent deals offered limited upside due to well-defined peer groups, exposure to economically sensitive sectors, muted growth prospects, significant insider selling or high perceived risk.
Unique concepts take off
In the initial post-Facebook stretch, eight of ten deals priced at or above the midpoint. Among these, ServiceNow (
), Five Below (
) and Palo Alto Networks (
), up 68% on average, each offered extremely strong organic growth and unique concepts or products. Accordingly, investors were very flexible in their valuation targets.
The same cannot be said of Bloomin' Brands, one of several mature casual dining companies, and Peregrine Semiconductor, which operates in the extremely competitive and low-visibility chip sector. The IPO discounts may have pulled investors in, but both companies likely lack the differentiation needed to justify premium multiples.
Quick-service restaurant chain CKE, which postponed its deal on Thursday, had similar problems, compounded by a significant debt burden, substantial selling by its private equity sponsor Apollo and negative reports from McDonald's and Wendy's. Performant Financial's insider selling and high regulatory exposure may have contributed to its low pricing, 31% below the midpoint.
Only one deal on the calendar for next week
In what could be the
final deal of August
, Hi-Crush Partners LP (
), which produces frac sands for oil and gas companies, will attempt to raise $225 million next week in a deal led by Barclays, Morgan Stanley, Credit Suisse and UBS. It plans to pay an implied 9.5% dividend.
US IPO market update
Year-to-date, there have been 90 US IPOs (down 5% year-over-year), which have together raised $30.6 billion (up 5%). In the past week, mobile advertising platform Millennial Media (
) and luxury luggage brand Tumi (
) have traded up 52% and 23%, respectively, in response to strong earnings reports and 20 others have gained at least 5%, raising the average aftermarket return from -0.2% as of last week to positive 1%. The average total return for 2012 IPOs is 17%, ahead of most major equity indices.
With performance holding up and the rumored volume of confidential filings, we expect activity to pick up shortly after Labor Day as deals push to price ahead of the presidential election.
Keywords / Tickers: US IPO Market,
Recently Priced IPOs
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Investors should consider the investment objectives, risks, charges and expenses carefully before investing.
As stated in the Prospectus, the total annual operating expenses for the Fund was 3.48%. The Adviser has contractually agreed to keep net expenses from exceeding 2.50% of the Fund’s average daily net assets for at least a year from the date of the Prospectus and for an indefinite period thereafter subject to annual re-approval of the agreement by the Board of Trustees.
An investor cannot invest directly in an index. Index returns do not represent Fund returns. The Index does not charge management fees or brokerage expenses, nor does the Index lend securities, and no revenues from securities lending were added to the performance shown.
Net Asset Value (NAV)
of the fund is calculated by dividing the total value of all the securities in its portfolio, less any liabilities, by the number of fund shares outstanding.
is current value at which an asset or service can be bought or sold.
is provided to show the comparison of the daily net asset value (NAV) and the midpoint of the closing bid/ask for each of the funds. The
Renaissance IPO Index® (IPOUSA)
is a stock market index based upon a portfolio of U.S.-listed newly public companies that includes securities prior to their inclusion in core U.S. equity portfolios. The
Renaissance International IPO Index® (IPOXUS)
is a stock market index based upon a portfolio of newly public companies listed on non-U.S. exchanges.
The S&P 500® Index (SPX)
is a stock market index based on the market capitalizations of 500 large companies whose common stock is publicly traded on the NYSE.
Investments in the
Renaissance IPO ETF, symbol "IPO"
Renaissance International IPO ETF, symbol "IPOS"
(the “ETFs”), and the
Global IPO Fund, symbol "IPOSX"
(the “Mutual Fund”) are subject to investment risk, including possible loss of the principal amounts invested. The ETFs and the Mutual Fund (the “Funds”) invest in companies that have recently completed initial public offerings. These stocks are unseasoned equities lacking trading history, a track record of reporting to investors and widely available research coverage which many result in extreme price volatility. Due to a greater number of IPOs in certain segments, the Funds may also be subject to information technology and financial sector risk, small and mid-capitalization company risk, and, for the Renaissance International IPO ETF, emerging markets risk. The Funds may hold securities in the form of Depository Receipts, REITs, and Partnership Units which have greater risks than common shares. The strategies have high portfolio turnover and securities lending risks. The returns of the ETFs may not match the return of the respective indices. The ETFs are classified as non-diversified investment companies subject to concentration risk.
Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus and/or summary prospectus with this and other information, please visit
. Read the prospectus carefully before investing. Renaissance Capital Investments, Inc., distributor for the Mutual Fund. Foreside Fund Services, LLC, distributor for the ETFs, 1-866-486-6645.
The information contained herein is proprietary and copyrighted. The media is welcome to use our information and ideas, provided that the following sourcing is included:
Renaissance Capital - manager of IPO-focused ETFs.
The information and opinions expressed herein were prepared by Renaissance Capital's research analysts and do not constitute an offer to buy or sell any security. Renaissance Capital, the
Renaissance IPO ETF (symbol: IPO)
Renaissance International IPO ETF (symbol: IPOS)
, or the
Global IPO Fund (symbol: IPOSX)
, may have investments in securities of companies mentioned.
Register for Updates
Renaissance Capital LLC is an SEC-registered investment adviser.
Renaissance Capital Investments, Inc. is a
-registered broker-dealer, and member of
© 2014 Renaissance Capital LLC. All rights reserved.