Recent volatility has bankers dusting off the 2023/2024 IPO playbook. Look at the week’s two major listings.
SoftBank's PayPay (Nasdaq: PAYP) priced below the range to raise $880 million, compared to its initial $1 billion target. Investors seemed happy to get profitable growth at a reasonable valuation. The fintech finished up +32%, with impressive day 2 trading.
Satellite provider MDA Space (NYSE: MDA) completed an expedited cross-listing from Canada, raising $300 million. It finished down -2%.
These deals echo some key themes of years past.
Emphasis on profitability: IPO growth stories often come with losses. When investors lose their appetite for risk, profitable growth becomes more important.
Cross-listings and carve-outs: Trading history is a rare comfort in the IPO market, but eases some risk in a new listing.
Discounted valuations: Challenging conditions require compelling price tags.
Cornerstone investors: Three institutions took down a quarter of the PayPay deal.
Tight floats: PayPay sold 8% of its shares, below the typical 10-20% float.
It’s not clear yet if the current headwinds are more than a passing storm. That will determine if the IPO window reopens for riskier growth stories in the near term, or if more deals follow the old tactics.
The week’s largest filer looks like an example of the latter. Madison Air Solutions (NYSE: MAIR) filed for an estimated $2 billion IPO, pitching a large and growing HVAC business.
Speaking of the pipeline, senior housing REIT Janus Living (NYSE: JAN) is eligible to launch its roadshow next week. It also checks several boxes: large, cash flow positive, and carved out of a public parent (Healthpeak Properties).
Janus and Madison Air are the top candidates to be March’s last major deals, so expect a fairly quiet end to Q1.
The IPO Index ended the week about flat, outperforming the S&P 500, which slid -1.6%. Solar tracker maker Nextpower led the winners, up +18.0%. Contractor software provider ServiceTitan fell -14.7% on mixed earnings.
Take care,
Bill Smith
CEO and Founder
Renaissance Capital
|
Biggest price changes through
Mar 13th
in the
Renaissance IPO Index
|
||
|---|---|---|
| Top 5 | ||
| Nextpower (Nextracker) | NXT | 18.0% |
| Klarna Group | KLAR | 15.7% |
| Figure Technology Solutions | FIGR | 15.1% |
| Circle Internet Group | CRCL | 13.2% |
| CoreWeave | CRWV | 11.1% |
| Bottom 5 | ||
| ServiceTitan | TTAN | -14.6% |
| Netskope | NTSK | -13.7% |
| BETA Technologies | BETA | -13.6% |
| Figma | FIG | -10.6% |
| StandardAero | SARO | -9.7% |
| Sectors | ||
| Energy | 5.0% | |
| Financials | 4.2% | |
| Consumer Discretionary | -0.8% | |
| Industrials | -1.7% | |
| Real Estate | -2.4% | |
| Technology | -3.3% | |
| Consumer Staples | -4.2% | |
| Health Care | -5.1% | |
Renaissance IPO ETF (NYSE symbol: IPO) tracks the Renaissance IPO Index
The Renaissance IPO Index returned 0.0% last week vs. -1.6% for the S&P 500.
