Micro-cap IPOs are here to stay.
One micro-cap priced this week, and several more are coming up. On Friday, a developer of blood clot meds Cadrenal Therapeutics (Nasdaq: CVKD) raised $7 million and fell -19%.
The bigger news is what didn’t get done: Chinese edtech company QuantaSing delayed a $41mm offering led by Citi. It’s still on the calendar, though timing now coincides with Lunar New Year. US-listed Chinese companies have seen explosive returns in recent months, but this deal had a bit of “hair” based on last quarter’s growth (-11% y/y) and profit margin (-15%).
One sizable IPO launched, Texas oil & gas producer TXO Energy Partners LP, set to trade next Friday. Its pitch is a combination of 1) a strong energy sector, 2) the track record of CEO Bob Simpson, and 3) an estimated first-year distribution of $3.75 per unit. That’s a whopper 19% yield at the $20 midpoint, but long-term dividends will depend on energy prices. If all goes well, expect other energy filers BKV Corp and Bounty Minerals to follow.
The IPO pipeline is slowly building, with $100mm filings this week from hypertension biotech Mineralys Therapeutics, Chinese lidar company Hesai Group, and Israeli power producer Enlight Renewable Energy. Enlight joins other big renewable plays in the pipeline Nextracker and MN8 Energy.
The IPO Index rose +0.8% this week, solidly beating the S&P 500’s -0.7% loss. Consumer tech and fintech led the winners with lending platform Affirm up +11.0%, while oil & gas fracking play ProFrac came in last, off -10.7%.
Take care,
Bill Smith
Co-Founder and CEO
Renaissance Capital
PS: The IPO market is getting support from buyout firms and corporate M&A; our analysts found 40+ deals in the past year.
Weekly IPO Winners & Losers
| Company | Ticker | Return |
|---|---|---|
| Affirm Holdings | AFRM | 11.0% |
| DoorDash | DASH | 10.9% |
| Coinbase Global | COIN | 10.4% |
| ZIM Integrated Shipping Services | ZIM | 8.2% |
| Dun & Bradstreet Holdings | DNB | 6.9% |
| Company | Ticker | Return |
|---|---|---|
| ProFrac Holding | ACDC | -10.7% |
| Inari Medical | NARI | -7.0% |
| Xpeng | XPEV | -5.9% |
| Legend Biotech | LEGN | -5.5% |
| Full Truck Alliance | YMM | -5.4% |
| Sector | Return |
|---|---|
| Financials | 2.1% |
| Industrials | 2.0% |
| Technology | 0.8% |
| Health Care | -0.4% |
| Consumer Discretionary | -1.2% |
| Real Estate | -2.7% |
| Consumer Staples | -3.1% |
| Energy | -10.7% |
Renaissance IPO ETF (NYSE symbol: IPO) tracks the Renaissance IPO Index
The Renaissance IPO Index returned 0.8% last week vs. -0.7% for the S&P 500.
