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US IPO Weekly Recap: All best-efforts and uplistings
Analyst IPO Market Commentary
The only deals to get done this week were uplisted or completed on a best-efforts basis.
Although there were originally six IPOs on
for this week, only Kura Oncology, First Guaranty Bancshares and Fuling Global were able to get their deals done. Xtera Communications (
) and Sole Elite Group (
) pushed back their IPOs, and in light of recent market pressure, GenSight Biologics (
) officially postponed. In a positive sign for the IPO market, nine companies set terms this week and four disclosed financial results for the 3Q15. Next week could see as many as nine deals, including four health care companies, a bank, a consumer lender and a learning management software company.
The market remains difficult for the health care sector. In the last 30 days, 15 companies have gone public, popping 3.5% and returning 2.1% on average. However, six out of seven health care IPOs have priced below their original range, dropping 1.6% in their debuts and returning -5.6% as of Friday. Excluding health care in that same period, eight deals returned 9% overall.
Does Kura have the cure?
On Wednesday, Fidelity- and ARCH-backed Kura Oncology (
) raised $50 million as it uplisted from the OTC to the Nasdaq. The company commands a market cap of $203 million and an enterprise value of $111 million. The company is attempting to revive a previously shelved J&J cancer drug, tipifarnib, which was rejected by the FDA in 2005 due to low response rates and short response duration. The offer price of $8 was well below the $12 closing price on Wednesday (OTC: KURO), but 27% above the $6.32 price in a March 2015 financing round. After falling 2% in its first day, Kura posted a small gain for the week, closing Friday at $8.07.
Banking on southern hospitality
Louisiana bank First Guaranty Bancshares (
) priced a downsized Nasdaq uplisting on Thursday, raising $11 million by going public at $18.50, commanding a market cap of $127 million. The bank, which uplisted from the OTC Pink (symbol: FGBI), had previously filed to offer 750,000 shares when its share price was $21 (market cap of $148 million). In December 2014, First Guaranty postponed a $60 million IPO at a market value of $197 million.
Plastic knife-maker cuts deal size
Chinese microcap Fuling Global (
), which manufactures plastic cutlery, raised $20 million at a market cap of $78 million. It offered four million shares at $5, completing the deal on a best-efforts basis. The company originally filed for a $30 million IPO in September, but had to push it back and cut terms to get it done.
Reflecting the weak technical backdrop for biotechs and its early stage, GenSight Biologics
its IPO on Thursday. It had hoped to raise $65 million, offering shares at an 81% premium to its last private funding round in July 2015. Xtera Communications was unable to price its $55 million IPO this week, possibly due to concerns about its high customer concentration, lumpy revenue and inconsistent growth. Chinese shoe sole manufacturer Sole Elite Group delayed its IPO again, even after slashing the deal size to $12.5 million from $33 million.
3 IPOs during the week of November 2, 2015
Deal size ($mm)
IPO price vs. midpoint
Return at 11/6
First Guaranty Bancshares (
Louisiana bank with 21 branches
Kura Oncology (
Biotech: J&J cancer drug
Fuling Global (
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IPO Market Snapshot
156 IPOs have raised $28.2 billion in 2015; just 42% are trading above their IPO price. The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is down 4% year-to-date, compared to +2% for the S&P 500. Renaissance Capital's
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