Three IPOs raised $164 million, bringing the year's total up to 231 offerings and $74 billion in proceeds. Six deals were expected to raise $550 million to make it the first week in over a month to raise under $1 billion. However, three of those postponed, including the two largest, Fifth Street Asset Management and Electronic Cigarettes International, so that the IPO market brought in about one third of the expected proceeds. The week saw three small offerings with modest gains from a Wisconsin bank and two biotechs, one of which was already listed in Paris.
More importantly, 2014 IPOs made impressive gains as broader markets recovered from last week's selloff amid strong corporate earnings reports. The VIX volatility index fell by nearly 50% from its peak of 31 last week, and a more stable market already signals an active November. The high level of postponed and withdrawn deals was likely due to company-specific issues, judging by the nine that joined the IPO calendar, up from zero last week.
Year's second-smallest IPO is the best-performing bank
Anchor BanCorp Wisconsin (ABCW) raised just $10 million, making it the second-smallest IPO of 2014. With a market cap of $247 million at the IPO, Anchor had the smallest float relative to its size, suggesting the IPO was used more as a listing opportunity rather than a capital raise. Banks have been among the worst-performing sectors in the IPO market this year, and Anchor's 21% gain tops the list.
Two biotechs price
On Monday, DBV Technologies announced it would price the next day, raising $93 million for the French biotech. The company is already listed on the Euronext Paris under the symbol DBV, but US investors warmed to its immunotherapy patches designed to treat a patient's peanut allergy. DBV recently announced topline results for its Phase 2b trial and received Fast Track Designation from the FDA.
The week's other biotech, Proteon Therapeutics (PRTO), is in Phase 3 trials for a drug that prevents scarring that occurs after AVF procedures, which are common for patients on dialysis. It priced below the range and ended the week flat.
Four IPOs postpone
Fifth Street rejected by Wall Street: Fifth Street Asset Management (FSAM), which would have been the week's largest IPO, postponed its proposed $200 million offering. While the credit-focused asset manager company has benefited from rapid AUM growth (now $5.6 billion) and provides an attractive payout ratio, investors may have pushed back based on the performance of peers, most notably Medley Asset Management (MDLY; down 6%)
Electronic Cigarette IPO goes up in smoke: Electronic Cigarettes International Group (ECIG), which currently trades on the OTCBB, had planned to raise $150 million in an uplisting to the NASDAQ. The company is led by the former Chief Commercial Officer of Anheuser Busch and targets a rapidly growing multi-billion market, but suffered from a drop in revenue during the 1H14 due to a shift toward e-liquids (and not over concerns of e-cancer).
No love for neurostimulators: EndoStim's proposed $35 million IPO failed to stimulate investors. The company sells electrical devices used to treat GERD, which is associated with acid reflux. Another neurostimulator maker, NeuroSigma (NSIG), postponed its IPO two weeks ago. Biotech Virobay (VBAY) had originally planned to raise $50 million last week but later set pricing as day-to-day. This week it officially postponed.
Four IPOs withdraw
Four companies withdrew their IPOs during the week, including Chesapeake Oilfield Services (COS; $863 million deal size), yeast infection biotech Viamet Pharmaceuticals (VIAM; $75 million), California homebuilder City Ventures (CTYV; $150 million) and biotech Angion Biomedica (ANGN; $36 million).
| IPO pricings (week of October 20, 2014) | |||||
| Company (Ticker) | Business | Deal Size ($mm) | IPO Price vs. Midpoint | First-day pop | Return as of 10/24 |
| Anchor BanCorp Wisconsin (ABCW) |
Biotech: Peanut allergy patch |
$10 | 0% | 17% | 25% |
| DBV Technologies (DBV) | Biotech: Peanut allergy patch | $93 | -6% | 6% | 19% |
| Proteon Therapeutics (PRTO) | Biotech: Reduces scarring from dialysis procedure | $61 | -23% | 0% | 0% |
IPO Market snapshot
So far this year, 231 IPOs have raised about $74 billion, averaging a first-day pop of 13% and a total average return of 9%. The Renaissance US IPO Index, a market cap weighted basket of newly public companies designed to represent the US IPO market, has gained 4.6% year-to-date. Renaissance Capital's IPO ETF tracks the index, and its top holdings include Alibaba (BABA), Twitter (TWTR), Zoetis (ZTS), Workday (WDAY) and Hilton (HLT).
