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Week ahead: Get ready for a dose of high-growth health care with 8 IPOs
Analyst IPO Market Commentary
As many as 8 companies could go public in the US during the shortened holiday week.
The week's three high-growth health care IPOs that are on the
should receive the most interest, especially after
device maker Glaukos (
) priced above the range and finished up 56%.
For a look at the international IPO market, view our new
2Q 2015 Global IPO Review
and check back for the US Review early this week.
A stock is born: VC-backed pregnancy tests to go public
) plans to raise $100 million, and its proposed $850 million market cap makes it the week's largest company. Backed by Sequoia Capital, Natera claims that its non-invasive pregnancy tests are more accurate than competitors, and can be used 9 weeks in to determine fetal sex and a variety of genetic abnormalities (e.g. Down syndrome). It launched its core test in March 2013, and sales skyrocketed 189% to $159 million in 2014, gross profit rose 19 percentage points to 51% and EBITDA swung positive. Genetic testing companies like Natera have also been racing to develop a highly-lucrative non-invasive blood screen for cancer. Notable M&A includes Illumina's acquisition of Verinata and Roche's acquisition of Ariosa Diagnostics (
). Despite these tailwinds, sales have decelerated as its former two largest customers, Quest and Progenity, terminated contracts in 2014 to promote competitive products. The area is also highly litigious, and genetic diagnostics IPOs have faced challenges this year: Invitae (
), Opgen (
) and HTG Molecular (
) trade below the offer price, two IPOs postponed (
) and another (
) has delayed its launch. Our
takers are skeptical.
The new house call: Tell a doctor through Teladoc
) positions itself as the first public "telehealth" company, offering subscribers the ability to connect with a doctor via phone or internet 24/7 within 10 minutes. With an extensive network of physicians and major contract wins (including Aetna and Pepsi), Teladoc is the #1 player in a rapidly-growing space, and sales rose 75% to $17 million in the first quarter. However, the unprofitable company is still in a transition period: it must improve user utilization to win new contracts, even as the incremental benefit from higher utilization is not particularly beneficial to its bottom line.
The 3D-printed knee
) offers the only fully customizable knee replacement, which it manufactures with 3D printing. Sales grew 36% to $15 million in the first quarter, and its total market size could be as high as $15 billion. While fast-growth medical device companies have attracted investor interest, the company comes with a $280 million accumulated deficit and near-term unprofitability as it pitches its products against industry giants like Stryker, Smith & Nephew and Biomet/Zimmer.
Two dividend plays: Mortgage REIT and Coal MLP
Loan Core Realty Trust
) plans to raise $300 million in its IPO plus $205 million from GIC Private Limited, Jefferies (a bookrunner) and management in a private placement as it targets a market cap of $505 million. It has set an offer price of $20 per share. A bet on Chairman and CEO Mark Finerman, the REIT plans to use IPO proceeds to grow its portfolio of commercial mortgages.
CNX Coal Resources LP
) operates parent CONSOL Energy's (NYSE: CNX) Pennsylvania mining complex. It had planned to go public last week with a proposed annual yield above 10%, before the coal MLP slashed its valuation by 25% on Friday and set pricing as day-to-day. Coal prices have been driven lower by an increased supply of cleaner alternatives, and last year's much larger coal MLP, Foresight Energy LP (
), is down 36% from its offer price, -24% year-to-date, -16% in the past three months and -7% in the past month.
Three small-cap IPOs: Auto supplier, anemia biotech and solar project acquirer
), which has $130 million in annual sales, announced that it would attempt to price its $17 million IPO this week. Two other companies delayed public offerings last week and may try again this week. Backed by OrbiMed,
) plans to uplist from the OTCQB to the NASDAQ as it moves into Phase 2 trials for iron deficiency in anemic patients with CKD. Solar asset acquirer
) hopes to uplist from the Pink Sheets to the NASDAQ.
Renaissance Capital's IPO Calendar - Week of
LoanCore Realty Trust
Commercial mortgage REIT backed by Jefferies and GIC.
$14 - $16
Sells fully customized knee replacement implants.
CNX Coal Resources LP
BofA Merrill Lynch
MLP recently formed by CONSOL Energy to operate its Pennsylvania coal mines.
$15 - $17
Provides on-demand medical care through video/telephone consultations.
San Carlos, CA
$15 - $17
Cowen & Company
Sells non-invasive prenatal DNA tests.
Developing a therapy for iron deficiency in anemic patients with chronic kidney disease.
Aurburn Hills, MI
$8 - $10
Provides die cut plastic and foam products primarily used by automobile OEMs
$7 - $9
Roll-up planning to acquire 150 MW of solar energy projects in North Carolina.
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IPO pipeline update: June hits 1-year record with 10 large IPO filings
37 companies have submitted initial filings so far in June
, more than any month since June 2014. Ten more were added to the IPO pipeline last week, including seven with a deal size of $200 million or more; none of the prior week's fourteen filings were that large. Two fast-growing PE-backed consumer deals came from discount gym franchisor Planet Fitness (
) and SkinnyPop popcorn-maker Amplify Snack Brands (
). Two global packaging companies filed: Ardagh Group's metal can spinoff Oressa (
) and Carlyle/Madison Dearborn's paper packaging producer Multi Packaging Solutions (
). Freeport-McMoRan (NYSE: FCX) filed to spin off its oil and gas business (
) in a potentially $1 billion IPO while the second largest residential solar company Sunrun (
) could raise $500 million as early as July. With $2.8 billion in sales, leading Caribbean mobile provider Digicel (
) is the month's second telecom filer after Ooma (
). The initial filing of GC Aesthetics (
) may precede an uptick in
from Renaissance IPO news writers. Meanwhile Seres Therapeutics' (
) 186% return
suggests that the biotech frenzy is far from over.
IPO market snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index has traded up 8% year-to-date, compared to 2% for the S&P 500. Renaissance Capital's
(NYSE: IPO) tracks the index, and top
include Alibaba (
), Twitter (
) and Hilton Worldwide (
). The Renaissance International IPO Index has traded up 9% year-to-date, compared to 6% for the ACWX. Renaissance Capital’s International
(NYSE: IPOS) tracks the index, and top
include Altice and Deutsche Annington.
To find out if this is the best ETF for you, visit our
IPO Investing page.
Keywords / Tickers:
Recently Priced IPOs
ETF Express Award:
ETFExpress awards are based on a 'peer review system' whereby readers - including institutional and high net worth investors as well as managers and other industry professionals at fund administrators, brokers, custodians and advisers - are invited to elect a 'best in class' in a series of categories via an online survey. In each category, the firms with the most votes at the end of the voting period are subject to a final review by ETFExpress's Senior Editorial team.
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.
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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.
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is a stock market index based upon a portfolio of newly public companies listed on non-U.S. exchanges.
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Risk Disclosure: 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.
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. 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.
Definitions: The Renaissance IPO Index® 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 S&P 500® Index is a stock market index based on the market capitalizations of 500 large companies whose common stock is publicly traded on the NYSE or Nasdaq.
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