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Analyst IPO Market Commentary
Continuing the recent trend, four out of five deals priced below the range.
This week, five companies raised $765 million, pricing an average of 19% below their proposed midpoints. All four deals that priced below traded up, popping 10% on average and ending the week up 12%; the one that priced in its range dropped 6% in its first day and ended the week down 2.5%. One of the largest deals of 2015 postponed, and a company that filed in August for an IPO was acquired.
), which claims to have the
fastest growth in storage industry history
, was unable to live up to the hype surrounding its IPO and had the worst IPO of the week. After pricing its $425 million IPO at the $17 midpoint, it opened at $16.74 and declined further to $16. It fell again on Thursday, at one point slipping below the level of the last private round ($15.73), before recovering somewhat to $16.60 at Friday’s close. Pure Storage was the largest VC-backed tech IPO of 2015 and the first tech IPO since Rapid7 (
) went public in July. It is the only company out of ten in the last two weeks to price in its range and the only one this week to break issue.
It's in the cards
Payment card maker
CPI Card Group
) popped 22% in its first day, the best IPO this week. However, it had to cut its price by 41% and remove insider selling to get the deal done. The company has good growth prospects over the near-term, however investors were likely hesitant due to uncertainty surrounding its longer-term growth. It raised $150 million, 50% of the original proposed deal size.
Houston-based commercial bank
), which has $1.95 billion in assets, raised $55 million by offering 2.6 million shares (all primary) at $21, below the $22 to $24 range. It returned 10% in its debut, declining slightly the next day to finish the week up 7%. This year, 57% of IPOs are trading below their offer price; all seven banks to go public this year are trading above their IPO prices.
Positive signs for biotechs
) first-day pop of 7.5% can be taken as a good sign for biotechs, especially considering the recent declines in the Nasdaq Biotechnology Index (Nasdaq: NBI). It raised $80 million by pricing 6.7 million shares 20% below the range at $12. Vivo and Fidelity-backed
), which is developing a topical hydrogen peroxide treatment for common skin lesions, raised $55 million on Tuesday by offering 5.0 million shares at $11, far below the $14-$16 range. The deal size was 27% less than expected, and the $11 IPO price was just slightly above the $10.66 price of Aclaris' August 2015 financing round. The stock traded flat its first two days, but gained 13% on Friday to make it the second-best performer of the week.
), the leading provider of mobile services in the Caribbean, postponed its $1.8 billion IPO, reflecting emerging market weakness as well as its heavy debt load. Two companies originally scheduled for the week of September 28 failed to price again:
) had originally scheduled for an October 1 IPO; it is currently listed as day-to-day; and SynCardia Systems (
) has not set a new date after the voluntary recall of its SynCardia Total Artificial Heart was followed by a Class I FDA recall.
Several companies have been pushing off their IPO on a day-to-day basis.
) filed terms on September 8 and revised its terms on October 1, but it has not disclosed a definite date yet. Three microcap Chinese manufacturers,
Sole Elite Group
), have been on the calendar for at least two weeks each; all three are currently up in the air.
In pipeline news,
), a provider of compound sterile preparations that filed in August for an IPO, was acquired this week by AmerisourceBergen (Nasdaq: ABC) in an all-cash deal for $2.6 billion.
5 IPOs during the week of October 9, 2015
Deal size ($mm)
IPO price vs. midpoint
Return at 10/09
CPI Card Group (
Payment card provider
Aclaris Therapeutics (
Biotech: Skin lesions
Allegiance Bancshares (
Houston-based commercial bank
CytomX Therapeutics (
Biotech: cancer immunotherapies
Pure Storage (
Enterprise flash memory
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IPO Market Snapshot
Strong IPO volume in the fourth quarter will in part hinge on improved returns for recent IPOs. The Renaissance IPO Index has traded down 6.9% year-to-date, compared to -2.1% for the S&P 500. Renaissance Capital's
(NYSE: IPO) tracks the index, and
top ETF holdings
include Alibaba (
), Hilton Worldwide (
) and Twitter (
). The Renaissance International IPO Index has traded down 1% year-to-date, compared to -2.7% for the ACWX. Renaissance Capital’s International
(NYSE: IPOS) tracks the index, and
top ETF Holdings
include Recruit Holdings and Cheil Industries.
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