Three companies plan to raise about $550 million in the week ahead, including a fast-growing enterprise software provider, a large cable company and a Brazilian semiconductor manufacturer.
After this week, May is set to have 17 IPOs total, above the prior year period (15) but below last month (20). June is typically a more active month for IPOs. However, new filing activity will first need to pick up in the coming weeks.
The IPO pipeline is relatively low at 63 companies, or 35 that have filed or updated IPO documents this year. After this week, the pipeline will contain no major tech IPOs. Potential upcoming launches include low-cost airline Frontier Group (FRNT), commercial REIT Safety, Income and Growth (SFTY) and biotech Akcea Therapeutics (AKCA). The eight active energy IPO filers are likely waiting until after Thursday's OPEC meeting.
|US IPO Calendar|
|$11 - 13
|Provides a low-code app development platform with a focus on business processes.|
|SMART Global Holdings
|$13 - 15
|Leading manufacturer of memory chips for smartphones and computers in Brazil.|
|$20 - 22
|Sixth largest US cable operator, serving the midwest and southeast.|
|KBL Merger Corp. IV
|Blank check company formed by Dr. Marlene Krauss of KBL Healthcare Ventures.|
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Software for making software
Appian (APPN) is looking to raise $75 million at a fully diluted market cap of $755 million. It will join the ranks the year's other five enterprise software IPOs (OKTA, MULE, AYX, YEXT, CLDR); each have priced above the midpoint and averaged a first-day pop of 27%. Led by its founder and backed by Novak Biddle and NEA, Appian provides a platform that enables development team to be more efficient at creating applications. The company's sizable professional services segment has resulted lower gross margins and its reliance on large customer wins results in inconsistent growth. While total revenue growth was unimpressive in the 1Q17, its high-margin subscription business jumped 37%, and its $4+ billion market opportunity gives it room to grow.
The Cable buy: Will WideOpenWest wow investors?
WideOpenWest (WOW), the sixth-largest US cable company, is looking to raise $400 million in the week's largest IPO. Cord-cutting trends have led to a decline in voice and video subscribers, with sales hovering around $1.2 billion since 2014. To their credit, an experienced management team has improved EBITDA margins by focusing on its high speed data service. But high capex has kept free cash flow negative, a challenge as it grapples with a massive debt burden. Bought by Avista in 2005, WOW is the first IPO in the telecom sector to go public since 2015. Its offering will be closely watched by the much-larger Altice USA (ATUS), on file for an estimated $1 billion IPO.
Brazilian chip maker looks for the SMART money
SMART Global Holdings (SGH) is returning to public markets after being bought by Silver Lake in 2011. It aims to raise $74 million to pay down debt. SMART is Brazil's leading manufacturer of memory chips used in smartphones and computers, with an 80%+ share of the country's mobile memory market. Like many chip makers, customer concentration is a risk, and declining ASPs contributed to sales falling 17% in fiscal 2016 to $534 million, as gross margin pulled back slightly to 20%. The company is already seeing the benefits of a Brazilian economic recovery, with sales jumping +47% in the MRQ, though revelations of a political scandal Thursday may make investors more cautious: Recent US IPO Azul (AZUL), a Brazilian airline, fell over 10% on the news.
While we do not count blank check companies in our IPO stats, healthcare-focused SPAC KBL Merger Corp. IV (KBLMU) plans to raise $100 million. This year, 10 SPACs have priced IPOs, making it the most active year-to-date period since 2007.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is up 18.3% year-to-date, far ahead of the S&P 500, up 6.4%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Ferrari (RACE) and TransUnion (TRU). The Renaissance International IPO Index is up 13.8% year-to-date, while the ACWX is up 14.1%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Worldpay and ABN Amro. To find out if this is the best ETF for you, visit our IPO Investing page.