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Week ahead: 9 IPOs set to raise $1 billion during the week of November 9
Analyst IPO Market Commentary
The IPO market is having its pre-Thanksgiving feast.
Nine companies are on the
to raise a combined $1.0 billion during the week ahead. Online mortgage company loanDepot and education software provider Instructure stand out. The IPO market could see four mid-large companies in the biotech space, along with one regional bank. Two holdovers from last week round out the nine.
Four have scheduled offerings for the following week, including Jack Dorsey's SMB payments unicorn
) and security software provider
). Equity markets have recovered since September, with the S&P 500 posting positive returns in each of the past six weeks. IPO performance has also improved:
IPOs in the past 90 days average a +8% return
including +0.1% in post-first-day trading, compared to -2% and -14%, respectively, for all 2015 deals on average. In addition to returns,
(measured by a low VIX) has opened the window for IPOs, provided that they give investors a comfortable valuation discount -
over three-quarters of IPOs in the past three months have priced below the range
. Expect to see more offerings join the calendar this week, possibly Match Group (
The Internet's home for home loans
) is set to raise $510 million - more capital than the other eight IPOs this week combined. Run by industry veteran Anthony Hsieh, fast-growing loanDepot is the second-largest direct-to-consumer non-bank mortgage originator in the US. With its recently-introduced online personal loans, the company appears to be positioned between traditional mortgage providers (e.g. PennyMac) and online lenders like LendingClub (
). Online lender Live Oak Bancshares (
), which also has strong growth and a low-multiple/high-multiple peer set, went public in July and popped 12% on its debut but is now the year's only bank with a negative return.
Learning and earning (and burning cash)
) is going up against industry-leader Blackboard in providing learning management software for schools and corporations. The fast-growing (about +60%) SaaS company boasts a large sales backlog, 70% gross margins and 1,600 customers including Harvard, UPenn and Tesla. However, profitability remains several years out, and its corporation learning product is unproven. Technology IPOs have averaged a 20% first-day pop this year, but the group now has a gain of just 2%. Still, Instructure appears to be valued at a discount to SaaS peers on sales.
4 Biotech plays, all with market caps higher than $400 million
7 of the 10 biotechs that have IPO'd since October 1 had flat or negative returns on the first day, despite pricing an average of nearly 30% below the original midpoint. A biotech (GenSight,
) postponed its IPO last week for the first time since July.
The week's largest health care company,
), is a biotech developing regenerative therapies based on adult stem cells. Listed in Australia, the company has three late-stage candidates and large collaborations with Teva and Celgene. With a target market cap of $885 million, it could be the largest biotech to go public in the US since July's NantKwest (
). After postponing an IPO in February,
Advanced Accelerator Applications
) has come back with a higher valuation ($617 million) and new results on lead drug candidate Lutathera. Unlike the other health care IPOs, AAAP has product revenue from its diagnostic imaging business.
) is a well-funded biotech ($169mm in pre-IPO cash) backed by Third Rock and partnered with Sanofi developing gene therapies for advanced Parkinson's disease.
WAVE Life Sciences
) is a very early stage RNA therapy biotech backed by RA Capital.
Midwestern commercial bank
) is set to raise $41 million at a market cap of $183 million. The year's seven IPOs from traditional regional banks all trade above the offer price and average a +21% gain.
Two holdovers to see if their price is right
) had originally been scheduled to price a $55 million offering during the week of November 2. Backed by NEA, the Wellcome Trust and ARCH Ventures, Xtera has experienced massive losses but believes that the global demand for bandwidth has finally positioned the company's network optimization solution for high growth. Xtera may still need to come at a healthy discount to peers in this IPO market.
Sole Elite Group
) has been on the IPO calendar for two months, but last week the profitable Chinese manufacturer slashed its range and added warrants, suggesting an IPO is imminent.
Renaissance Capital's IPO Calendar - Week of November 9, 2015
Foothill Ranch, CA
$16 - $18
Nonbank consumer lender focused on originating and selling home loans.
WAVE Life Sciences
$15 - $17
Preclinical biotech developing optimized RNA therapies for rare diseases.
Advanced Accelerator Applications
Saint Genis Pouilly, France
$15 - $17
Radiopharmaceutical diagnostics company developing its first therapeutic product.
$15 - $17
Cowen & Co.
Gene therapy biotech targeting Parkinson's disease and other CNS disorders.
Salt Lake City, UT
$16 - $18
Operates an online learning management system for academic/corporate clients.
Developing regenerative medicine based on adult stem cells.
$9 - $11
Cowen & Co.
Provides optical transport systems for long-haul terrestrial/submarine networks.
$22 - $24
Commercial bank with $1.4 billion in assets and 25 locations in KS and MO.
Sole Elite Group
$5.50 - $7.00
Chinese athletic shoe sole manufacturer.
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IPO pipeline update: Tobacco and construction
New filings this past week would have been too late for November and too early for December. As such, only three companies filed. Looking to raise $100 million,
Turning Point Brands
) owns the #1 cigarette papers brand (Zig-Zag) and the #2 chewing tobacco brand (Skoler's) and has $200 million of annual sales (-1% growth YTD), 25% EBITDA margins and a lot of debt.
) uses its own quarry to build and maintain public works (bridges, roads) in California. Mesoblast, which also filed this past week, is able to turn around a US IPO so quickly due to its current listing abroad. Filings should pick up during the weeks of November 9 and 16: Those two weeks represent the last window for companies to submit filings and still go public in 2015.
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
(NYSE: IPO) tracks the index, and
top ETF holdings
include Alibaba (
), Hilton Worldwide (
) and Twitter (
). The Renaissance International IPO Index is down 1% year-to-date, compared with -3% for the ACWX. Renaissance Capital’s International
(NYSE: IPOS) tracks the index, and
top ETF Holdings
include Recruit Holdings and Samsung C+T.
To find out if this is the best ETF for you, visit our
IPO Investing page
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