Four companies and two SPACs went public this week, led by the first US-based restaurant IPO in four years.
Kura Sushi USA (KRUS), which operates 22 Japanese restaurants in the US, priced its IPO at the $14 low end to raise $41 million. This small revolving sushi bar concept has a large market opportunity, demonstrating both comp store sales growth and unit expansion. After popping 40% on its first day, it finished the week up 74%.
Cloud software provider Dynatrace (DT) was the week's largest IPO by far, pricing well above the range to raise $570 million at a $4.8 billion market cap. Backed by Thoma Bravo, the company finished the week with a 63% return, bolstered by high subscription growth and retention, and a market that has been receptive to high-growth SaaS IPOs.
UAE-based drilling contractor Borr Drilling (BORR) raised $47 million with its US IPO, pricing slightly below the as-converted last close of its shares on the Oslo Bors at $9.30. The year's five energy IPOs average a return of less than 1%; Borr Drilling finished the week down 4%.
Canadian cannabis producer Sundial Growers’ (SNDL) upsized IPO went up in smoke on its first day of trading, dropping 35%. Such sharp drops are rare. In the last 10 years, only six IPOs have fallen 30% or more on day one, four of which occurred in 2019. Despite high projected sales growth and a large market opportunity, the company is currently unprofitable, levered, and has a messy governance picture. In an interview with Bloomberg, Sundial’s CEO postulated that a regulatory breach at CannTrust (NYSE: CTST) is what spooked investors. The company traded up on Friday, finishing the week down 20%.
Immunology biotech RAPT Therapeutics (RAPT) postponed its $75 million IPO, while Chinese augmented reality platform WiMi Hologram Cloud (WIMI) delayed the pricing of its $34 million IPO until next week.
| 6 IPOs During the Week of July 29th, 2019 | |||||
|---|---|---|---|---|---|
| Issuer Business |
Deal Size |
Market Cap at IPO |
Price vs. Midpoint |
First Day Return |
Return at 08/02 |
| Kura Sushi USA (KRUS) | $41M | $115M | -7% | +40% | +74% |
| Operates 22 Japanese restaurants in the US featuring revolving sushi bars. | |||||
| Dynatrace (DT) | $570M | $4,799M | 33% | +50% | +63% |
| Provides a software intelligence platform for the enterprise cloud. | |||||
| Netfin Acquisition (NFINU) | $220M | $281M | 0% | +0% | +1% |
| Blank check company targeting a fintech business in an emerging market. | |||||
| Orisun Acquisition (ORSNU) | $40M | $52M | 0% | +0% | +0% |
| Blank check company led by an experienced Chinese investor targeting a high-tech business in the US. | |||||
| Borr Drilling (BORR) | $47M | $1,024M | 0% | +5% | -4% |
| Offshore shallow-water drilling company with a global fleet of 27 rigs. | |||||
| Sundial Growers (SNDL) | $143M | $1,686M | 0% | -35% | -20% |
| Early-stage Canadian cannabis producer. | |||||
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Only one company submitted an initial filing this week as we head into the August break: E&P Indonesia Energy (INDO) filed to raise $23 million in a US IPO.
| 1 Filing During the Week of July 29th, 2019 | |||
|---|---|---|---|
| Issuer Business |
Deal Size |
Sector | Lead Underwriter |
| Indonesia Energy (INDO) | $23M | Energy | Maxim |
| Onshore Indonesian E&P that operates eight wells. | |||
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In other noteworthy news, Beyond Meat (BYND), the plant-based meat substitute producer and best performing IPO of 2019 thus far, completed a follow-on offering on Wednesday, halfway through its lock-up period. The company offered 3.25 million shares, 3 million of which were from existing shareholders. Beyond Meat’s stock price tumbled 25% during the week to close at $177 (+608% from IPO).
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 8/1/19, the Renaissance IPO Index was up 38.0% year-to-date, while the S&P 500 had a gain of 19.2%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Spotify (SPOT) and Elanco (ELAN). The Renaissance International IPO Index was up 11.3% year-to-date, while the ACWX was up 12.1%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Meituan-Dianping and SoftBank.
