Growth IPOs are finally coming to market, and IPO investors are profiting.
ShockWave Medical (SWAV) priced above the range and jumped 79% on its debut, the best first-day pop since Elastic (ESTC) in October (+94%). While it is relatively early stage ($12mm in LTM sales), the company's cardiovascular device has shown advantages over competitors, and its products have seen strong initial traction since the mid-2018 launch.
Chinese brokerage Futu Holdings (FHL) raised $90 million and popped 28%. Futu profitably grew revenue by 160% in 2018 to $103 million, as Chinese retail demand for overseas securities takes off.
Two blank check companies also IPO'd this past week, raising a combined $490 million. These included cannabis-focused Tuscan Holdings (THCBU) and Crescent Capital-backed Crescent Acquisition (CRSAU). So far this year, 12 SPACs have raised $2.6 billion, compared to 14 other IPOs raising $1.4 billion. While 2019 IPO proceeds are down -88% from this point last year, 2019 SPACs have raised nearly 50% more than the YTD-2018 group, and 2018 was a 10-year record for SPACs.
| 4 IPOs During the Week of March 4th, 2019 | |||||
|---|---|---|---|---|---|
| Issuer Business |
Deal Size |
Market Cap at IPO |
Price vs. Midpoint |
First Day Return |
Return at 03/08 |
| ShockWave Medical (SWAV) | $97M | $509M | 13% | +79% | +86% |
| Sells medical systems used in treating cardiovascular disease. | |||||
| Futu Holdings (FHL) | $90M | $1,508M | 9% | +28% | +28% |
| Fast-growing low-commission online brokerage in China. | |||||
| Tuscan Holdings (THCBU) | $240M | $298M | 0% | +1% | +2% |
| Blank check company led by Stephen Vogel and targeting the cannabis industry. | |||||
| Crescent Acquisition (CRSAU) | $250M | $313M | 0% | +0% | +0% |
| Blank check company formed by Crescent Capital. | |||||
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Filings picked up this week as five IPOs joined the pipeline. Three stand out: Tradeweb (TW) is a highly profitable company with 20% growth, medical device maker Silk Road Medical (SILK) had 142% growth in 2018 ($35mm in sales), and Tufin Software (TUFN) boasts 30% growth and a positive EBITDA margin.
| 6 Filings During the Week of March 4th, 2019 | |||
|---|---|---|---|
| Issuer Business |
Deal Size |
Sector | Lead Underwriter |
| Iswill Acquisition (IWAC.U) | $230M | SPAC | Cantor Fitz. |
| SPAC led by former Virtustream executives targeting the software and internet industries. | |||
| Tradeweb Markets (TW) | $500M | Financials | JP Morgan |
| Electronic trading platform backed by Blackstone and Thomson Reuters. | |||
| Ruhnn Holding (RUHN) | $200M | Technology | Citi |
| E-commerce platform used by Chinese internet celebrities to sell fashion items. | |||
| Tufin Software (TUFN) | $100M | Technology | JP Morgan |
| Provides enterprise software for managing network security policies. | |||
| Blue Hat (BHAT) | $18M | Technology | ViewTrade |
| AR entertainment platform creating interactive children's toys and games. | |||
| Silk Road Medical (SILK) | $86M | Health Care | JP Morgan |
| Sells medical devices to treat carotid artery disease. | |||
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IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 3/7/19, the Renaissance IPO Index was up 26.8% year-to-date, while the S&P 500 had a gain of 10.1%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include VICI Properties (VICI) and Altice (ATUS). The Renaissance International IPO Index was up 8.0% year-to-date, while the ACWX was up 8.9%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include SoftBank and China Tower.
