Just three deals are on the IPO calendar for the week of October 27, with total proceeds expected to reach $900 million. Last week saw 3 IPOs raise $163 million, while 4 postponed and 4 more withdrew. The S&P recently had the year's largest 3-day slide followed by its best 5-day gain, and two straight weeks of low deal flow is a symptom of the market selloff. However, the calendar has already filled up as 9 IPOs set terms last week, 7 of which are expected to raise less than $100 million.
After a brief sputter, the IPO market will begin to build momentum this week with the $750 million offering of Shell Midstream Partners LP. Retail investors may recognize apparel retailer Boot Barn as others eye breast implant maker Sientra. From the broader (and still packed) pipeline we see biotechs continue to set IPO dates despite recent poor performance. Banks also remain in the mix while technology filers indicate the sector could soon pick up. On Monday morning, six IPOs set terms to price next week, including tech, health care, energy, consumer and banking (UPLD, NVRO, INCR, AM, FRPT, TBK).
Oil flow, cash flow: Year's largest MLP goes public
Gulf Coast pipeline operator Shell Midstream Partners LP (SHLX) is expected to raise $750 million, which would make it the year's largest MLP to IPO. Its deal size may increase given the reception recent MLP Dominion Midstream (DM), which priced at the high end and traded up 26% on its first day. Despite concerns over the drop in oil prices, Shell Midstream should raise interest based on its long-term fee-based agreements, distribution growth from a vast pool of dropdown assets and the reputation of parent Royal Dutch Shell.
Year's breast IPO targets a large and attractive market
Sientra (SIEN) is the newest entrant in the breast implant industry, which is currently dominated by a pair of large cap competitors - Johnson & Johnson's (JNJ) Mentor subsidiary and Allergan (AGN). Its pure play may appeal to certain investors as the IPO candidate already shook up the $600+ million market by being the first to offer anatomically shaped implants. Whether investors see Sientra as a portfolio enhancement will depend on its ability to continue to take market share; it had over 20% growth and $39 million sales in the LTM. Its appropriately-named primary shareholder, OrbiMed, is joined by Clarus Ventures, Abingworth and Goldman Sachs. The last medical device company to IPO, ReWalk Robotics (RWLK), trades over 100% above its IPO price.
Wall Street Hoedown: Retailer Boot Barn IPO boasts solid growth
Boot Barn (BOOT) is the largest retail chain focused entirely on US western and work-related footwear and apparel. Recapitalized by Freeman Spogli in 2011, the PE firm hopes to follow up the success of El Pollo Loco (LOCO), which has gained about 130% since its July IPO. Like Loco, Boot Barn is not saddled with debt and its Western US concentration leaves room for growth in the Midwest and Eastern US. Its strong comparative store sales growth and unit growth draw similarities with the last consumer IPO, Dave & Buster's (PLAY; up 18% since 10/9 offering), suggesting investors will not give this IPO the boot.
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Renaissance Capital will have Pre-IPO Research available on these upcoming IPOs prior to pricing.
IPO pipeline update
The IPO pipeline includes 135 deals looking to raise $28 billion. After six filed terms this morning, the IPO calendar has 11 scheduled deals for next week. In addition to Upland's launch, other technology IPOs appear to be gearing up for fourth quarter offerings. 7 of the 14 tech IPOs in the pipeline have submitted or updated filings in the past 10 days, while the remaining 7 are more stale at 100+ days. Last week's filing from Connecture (CNCT.RC) joins recent filers Workiva (WK) and VeriSilicon (VERI), while Cnova (CNV), GoDaddy (DADY.RC) and Good Technology (GDTC) filed amendments.
Last week, finance/tech company LendingClub took the next step toward IPO by choosing to list on the NYSE under the symbol LC. One bank set terms (RADB) and one initially filed (FGBI). The stream of midstream energy MLPs continues with the filing of MidCon Midstream (MCON.RC). Additionally, two companies revived plans for IPOs - Peak Resorts (SKIS; attempted IPO in December 2012) and Tobira Therapeutics (TBRA; August 2014).
Recent and YTD IPO trends
Last week, 3 IPOs raised $164 million, bringing the year's total to 231 IPOs and $74 billion in proceeds. Anchor BanCorp Wisconsin (ABCW), the year's second-smallest IPO at $10 million, was the week's winner, ending up 25% from its offer price to make it the year's best-performing bank.
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).
