Three Chinese issuers and a mortgage lender entered the public market this past week. All four priced below the midpoint. A German issuer and a SPAC submitted initial filings.
Chinese property management company Phoenix Tree Holdings (DNK) priced below the range to raise $130 million (76% from insiders) at a market cap of $2.7 billion. One of the top three apartment rental platforms in China, it is highly unprofitable (-15% gross margin). PhoenixTree finished flat.
Chinese biotech I-Mab Biopharma (IMAB) raised $104 million at a $909 million market cap. The first Chinese biotech to IPO in the US in over two years and the second largest to IPO in the US ever, I-Mab finished down 11%.
LIZHI (LIZI), the largest user-generated podcast platform in China, raised $45 million (73% indicated on by insiders) at a $503 million market cap.The high growth, unprofitable company has a large market opportunity, and its peers have traded well recently. LIZHI finished up 6%.
Mortgage lender Velocity Financial (VEL) priced below the $14-$16 range to raise $94 million at a $247 million market cap. The company has high loan yields and grew originations 33% in 2018, but it is highly levered. Velocity finished up 4%.
| 4 IPOs During the Week of January 13th, 2020 | |||||
|---|---|---|---|---|---|
| Issuer Business |
Deal Size |
Market Cap at IPO |
Price vs. Midpoint |
First Day Return |
Return at 01/17 |
| LIZHI (LIZI) | $45M | $503M | -8% | +6% | +6% |
| Chinese interactive podcast platform for user-generated content. | |||||
| Velocity Financial (VEL) | $94M | $247M | -13% | +4% | +4% |
| Mortgage lender focused on residential rental and small commercial properties. | |||||
| Phoenix Tree Holdings (DNK) | $130M | $2,711M | -13% | +0% | +0% |
| Renovates and sub-leases apartments in Chinese cities. | |||||
| I-Mab Biopharma (IMAB) | $104M | $909M | 4% | -11% | -11% |
| Late-stage cancer/autoimmune biotech developing in-licensed antibodies in China. | |||||
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There were four filings this week. Carlyle-backed German chemicals company Atotech (ATC) filed to raise $100 million though we estimate the deal size may be closer to $1 billion. SPAC East Stone Acquisition (ESSCU) filed to raise $50 million to acquire a fintech business. Cloud-based real estate brokerage Fathom Holdings (FTHM) filed to raise $14 million and biotech Revolution Medicines (RVMD) filed for $100 million.
| 4 Filings During the Week of January 13th, 2020 | |||
|---|---|---|---|
| Issuer Business |
Deal Size |
Sector | Lead Underwriter |
| East Stone Acquisition (ESSCU) | $100M | SPAC | I-Bankers |
| Blank check company formed by East Stone Capital to acquire a fintech business. | |||
| Fathom Holdings (FTHM) | $14M | Real Estate | Roth Cap. |
| Cloud-based full-service real estate brokerage. | |||
| Revolution Medicines (RVMD) | $100M | Health Care | JP Morgan |
| Clinical stage biotech developing novel targeted therapies for cancer. | |||
| Atotech (ATC) | $1,000M | Materials | Citi |
| Carlyle-backed specialty chemicals company carved out of Total. | |||
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In other news, Renaissance Capital released its reports on the top Auditors and the top Law Firms of the 2019 IPO market.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 1/17/20, the Renaissance IPO Index was up 7.5% year-to-date, while the S&P 500 had a gain of 2.66%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Uber (UBER) and Spotify (SPOT). The Renaissance International IPO Index was up 4.0% year-to-date, while the ACWX was up 1.4%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks
the index, and top ETF holdings include Adyen and Meituan-Dianping.
