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US IPO Week Ahead: Software, consumer products, and payment tech lead a diverse 14 IPO week

September 17, 2021
Week Ahead

Summer may be over, but the IPO market is just heating up as 14 IPOs are slated to raise $5.3 billion in the week ahead. The diverse group includes software, consumer products, payment technology, and more.

The largest deal of the week, Freshworks (FRSH) plans to raise $855 million at a $9.6 billion market cap. The company’s core product is its customer support software, and it also offers IT service management software and a nascent competitor to CRM solutions. While losses are expected to increase with S&M spending, Freshworks has delivered solid growth and 100%+ net dollar-based revenue retention as of 6/30/21.

Canadian consumer products company Knowlton Development (KDC) plans to raise $800 million at a $3.1 billion market cap. Over the past three years, Knowlton has been responsible for co-developing 9,000+ products across a variety of categories, and its products are sold by its brand partners in 70+ countries. Despite using offering proceeds to pay down debt, Knowlton will be leveraged post-IPO.

Restaurant payment processor Toast (TOST) plans to raise $685 million at a $17.9 billion market cap. Toast provides a suite of integrated payment and software solutions that are designed to streamline restaurant operations. The company grew ARR over 100% in the 1H21, though it has historically been unprofitable, and growth could slow as tailwinds from restaurants reopening abate.

Global money transfer firm Remitly Global (RELY) plans to raise $487 million at a $7.5 billion market cap. Remitly provides digital financial services for immigrants and their families in over 135 countries, and it has expanded its core cross-border remittance product to over 1,700 corridors worldwide. The company has demonstrated growth and margin improvement, though it remains unprofitable.

Software firm Clearwater Analytics (CWAN) plans to raise $450 million at a $3.7 billion market cap. Clearwater provides its 1,000+ clients with cloud-native software that allows them to simplify their investment accounting operations, and the company has a 100% recurring revenue model. A new investor and certain existing shareholders intend to purchase $150 million worth of shares in the IPO.

Food company Sovos Brands (SOVO) plans to raise $350 million at a $1.5 billion market cap. Formed by Advent International, Sovos Brands offers a select group of acquired premium food brands. According to the company, its largest brand of products, Rao's, included the #1 selling SKU in the pasta and pizza sauce category. Profitable with solid growth, Sovos will be leveraged post-IPO.

Customer engagement software provider EngageSmart (ESMT) plans to raise $349 million at a $4.1 billion market cap. The company provides software that simplifies online workflows like paperless billing, electronic payment processing, scheduling, and client communication. While growth may slow post-pandemic, EngageSmart has a sticky customer based and a long track record of profitability.

Hiring solutions provider Sterling Check (STER) plans to raise $300 million at a $2.1 billion market cap. Sterling is one of the leading US providers of background checks for corporate and government customers. The company serves more than 50% of the Fortune 100, often with exclusive contracts, though it operates in a highly competitive market.

Jewelry retailer Brilliant Earth Group (BRLT) plans to raise $250 million at a $1.4 billion. Brilliant Earth is a digital-first jewelry company and a global leader in ethically sourced fine jewelry. The company has sold to consumers in all US states and over 50 countries, and has served over 370,000 customers through its e-commerce platform and 13 showrooms.

Online fashion platform a.k.a. Brands (AKA) plans to raise $250 million at a $2.3 billion market cap. a.k.a. acquires digitally-focused fashion brands oriented toward millennial and Gen Z consumers, starting with its acquisition of Princess Polly in 2018. The company has successfully expanded Princess Polly and has a long runway to grow its brands in the US, but its M&A strategy carries execution risk.

COVID-19 test maker Cue Health (HLTH) plans to raise $200 million at a $2.4 billion market cap. Cue’s first commercially available diagnostic test for use with its Cue Health Monitoring System is its COVID-19 Test Kit, which has been authorized by two EUAs. Cue has five additional Test Kits in late-stage technical development, for which it expects to begin seeking FDA authorization or clearance in the 2H22.

London-listed crypto mining company Argo Blockchain (ARBK) plans to raise $138 million at an $855 million market cap. Argo states that it is a leading blockchain technology company focused on large-scale mining of Bitcoin and other cryptocurrencies. Argo has a fleet of more than 21,000 purpose-built computers (mining machines) and can generate more than 1,075 petahash per second.

Personalized supplements seller Thorne Healthtech (THRN) plans to raise $126 million at an $892 million market cap. The company’s vertically integrated brands, Thorne and Onegevity, provide actionable insights and personalized data, products, and services. Profitable with strong growth, Thorne has a base of more than 3 million customers.

Canadian bank VersaBank (VBNK) plans to raise $50 million at a $269 million market cap. VersaBank is a Canadian Schedule I chartered bank and states that it is one of the world's first fully digital financial institutions. As of July 31, 2021, VersaBank had $1.8 billion in assets, $1.6 billion in loans, $1.5 billion in deposits, and $202 million in stockholders' equity.

U.S. IPO Calendar
Issuer
Business
Deal Size
Market Cap
Price Range
Shares Filed
Top
Bookrunners
a.k.a. Brands (AKA)
San Francisco, CA
$250M
$2,341M
$17 - $19
13,888,889
BofA
Credit Suisse
Operates a portfolio of Millennial and Gen Z online fashion brands.
Freshworks (FRSH)
San Mateo, CA
$855M
$9,646M
$28 - $32
28,500,000
Morgan Stanley
JP Morgan
Provides a business SaaS for customer support and IT projects.
Sterling Check (STER)
New York, NY
$300M
$2,122M
$20 - $22
14,285,000
Goldman
JP Morgan
Provides tech-enabled background screening and identity verification services.
Toast (TOST)
Boston, MA
$685M
$17,912M
$30 - $33
21,739,132
Goldman
Morgan Stanley
Provides mobile and digital payment processing and other services for restaurants.
VersaBank (VBNK)
London, Canada
$50M
$269M
$10.37
4,821,601
Raymond James
Canadian digital bank.
Argo Blockchain (ARBK)
London, United Kingdom
$138M
$855M
$18.40
7,500,000
Jefferies
Barclays
Blockchain technology company focused on large-scale crypto mining.
Brilliant Earth Group (BRLT)
San Francisco, CA
$250M
$1,418M
$14 - $16
16,666,667
JP Morgan
Credit Suisse
Digital-first retailer of ethically sourced fine jewelry.
EngageSmart (ESMT)
Braintree, MA
$349M
$4,093M
$23 - $25
14,550,000
JP Morgan
Goldman
Provides SaaS solutions for invoicing, payments, and health practice management.
Knowlton (KDC)
Longueuil, Canada
$800M
$3,081M
$13 - $15
57,142,857
Goldman
JP Morgan
Canadian maker of home, beauty, and personal care products.
Remitly (RELY)
Seattle, WA
$487M
$7,482M
$38 - $42
12,162,777
Goldman
JP Morgan
Provides a mobile payment service for international money transfers.
Sovos Brands (SOVO)
Louisville, CO
$350M
$1,461M
$14 - $16
23,334,000
JP Morgan
Goldman
Sells premium food brands including Rao's and noosa.
Thorne Healthtech (THRN)
New York, NY
$126M
$892M
$13 - $15
9,000,000
BofA
Cowen
Offers a suite of personalized dietary supplements.
Clearwater Analytics (CWAN)
Boise, ID
$450M
$3,656M
$14 - $16
30,000,000
Goldman
JP Morgan
Provides cloud-native software for investment accounting and analytics.
Cue Health (HLTH)
San Diego, CA
$200M
$2,429M
$15 - $17
12,500,000
Goldman
Morgan Stanley
Develops and sells molecular home tests for COVID-19 and other diseases.

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IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 9/16/2021, the Renaissance IPO Index was up 7.8% year-to-date, while the S&P 500 was up 19.1%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Snowflake (SNOW) and Palantir Technologies (PLTR). The Renaissance International IPO Index was down 14.8% year-to-date, while the ACWX was up 9.5%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include EQT Partners and Smoore International.