20 IPOs this past May raised $4.3 billion in proceeds, just one IPO short of the 21 in May 2014.
Year-to-date, 69 companies have gone public in 2015, a 40% drop from the 115 that had priced through May 2014. Twenty-nine (55% health care) have withdrawn or postponed IPOs this year, up 61% from this point last year.
Of the 20 IPOs this May, 75% trade above their offer price. The group has an average return of +15%, including 6% on the first day and 9% in the aftermarket. IPOs typically gain about 13% on the first day, but only 20% of May IPOs reached that level, and 35% had a negative first-day return.
June is also typically an active month of IPOs, and four deals are on the IPO calendar to kick off the month.
Sectors
Health care continued to dominate the IPO market in May with nearly half of all deals, most of which were biotechs. The sector had both the best performer, rare disease biotech aTyr Pharma (LIFE; +62%), and the worst performer, genetic test company OpGen (OPGN; -33%). The two technology IPOs, Baozun (BZUN; +22%) and Shopify (SHOP; +60%) did well after pricing at opposite ends of their proposed price. There were three energy GP/MLPs, one transportation LLC and one REIT (the only financial sector). One consumer deal, Bojangles' (BOJA), price above its range, popped 25%, and now trades 45% above its offer price.
Top IPOs
The health care, tech and consumer sectors typically show up among top performers, and all three are represented this month. Fidelity-backed aTyr Pharma (LIFE) gained just 7% on its debut, but the early-stage biotech's new protein class has a large number of applications for skeletal muscle disorders. High-growth SaaS provider Shopify was given a 31% premium to its midpoint - the year's highest - but continued to trade up. Bojangles' showed that IPO investors continue to have an appetite for restaurant concepts.
| May 2015 Top 3 IPOs | |||||
| Company (Ticker) | Business | Deal size ($mm) | IPO price vs. midpoint | 1st-day pop | Return at 5/29 |
| aTyr Pharma (LIFE) | Biotech: Rare diseases | $75 | 0% | 7% | 64% |
| Shopify (SHOP) | SaaS for online stores | $131 | 31% | 51% | 60% |
| Bojangles (BOJA) |
Chicken restaurant chain | $147 | 19% | 25% | 45% |
Bottom IPOs
The month's three worst performers - two biotechs and one diagnostics company - all went public on May 5. Two of the five that ended the month negative (Fortress LLC (FTAI) and Adaptimmune (ADAP)) went public at market caps above $1 billion. Even with other genetic test companies failing to go public (AGMX, IDGX) and Invitae (NVTA) down 22%, OpGen (OPGN) managed to price significantly below its range, but it is now down 34%, making it the year's second-worst performer.
| May 2015 Bottom 3 IPOs |
|||||
| Company (Ticker) | Business | Deal size ($mm) | IPO price vs. midpoint | 1st-day pop | Return at 5/29 |
| OpGen (OPGN) | Genetic tests for drug-resistant infections | $17 | -33% | -19% | -34% |
| CoLucid Pharmaceuticals (CLCD) | Biotech: Acute migraines | $55 | -29% | -20% | -13% |
| Adaptimmune (ADAP) | Biotech: Cancer immunotherapy | $191 | 6% | -6% | -9% |
Largest IPOs
May's two largest IPOs both offered levered plays on publicly-traded natural gas pipelines through GP interests. Tallgrass Energy GP LP (TEGP) raised $1.2 billion at a $4.6 billion market cap, making it year's largest IPO and the second largest by market cap. EQT GP Holdings LP (EQGP) raised $621 million at a $7.2 billion market cap, making it the year's largest company to go public. Black Knight Financial Services (BKFS) was also a spinoff, as Fidelity National Finance's (NYSE: FNF) mortgage data platform.
| May 2015 Largest 3 IPOs | |||||
| Company (Ticker) | Business | Deal size ($mm) | IPO price vs. midpoint | 1st-day pop | Return at 5/29 |
| Tallgrass Energy GP LP (TEGP) | GP interests in TEP | $1,204 | 14% | 10% | 11% |
| EQT GP Holdings LP (EQGP) | GP interests in EQM | $621 | 20% | 22% | 19% |
| Black Knight Financial Services (BKFS) | Mortgage data platform |
$441 | 4% | 11% | 13% |
Initial filings pick up; here's what could launch in June
May was the most active month for initial filings with 27 new additions to the IPO pipeline. The technology sector picked up with five new filings, including Evolent Health (EVH), Mindbody (MB) and Alarm.com (ALRM). Besides these five, there are only two other tech deals with up-to-date filings in the pipeline, chip companies eASIC (EASI) and VeriSilicon (VERI), which may benefit from a recent surge in semiconductor M&A activity. May saw three consumer IPOs file: Fitbit (FIT), Wingstop (WING) and MasterCraft (MAST.RC). We estimate that fast-growing Fitbit could raise $400 million or more. Brazilian steakhouse Fogo de Chao (FOGO) recently updated 1Q15 financials. The month's largest filer was SunEdison's emerging markets yieldco TerraForm Global (TERG.RC), which filed to raise $700 million. Large IPOs Univar (UNVR) and TransUnion (TRU) updated their financials. The health care sector maintained its top position, representing 38% of all new IPOs on file. Notable health care deals include high growth device makers Glaukos (GKOS) and ConforMIS (CFMS), along with well-funded biotech Seres Therapeutics (MCRB).
IPO market snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index has traded up 8% year-to-date, compared to 3% for the S&P 500. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Alibaba (BABA), Hilton Worldwide (HLT) and Twitter (TWTR). The Renaissance International IPO Index has traded up over 12% year-to-date, compared to less than 8% for the ACWX. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF Holdings include Altice and Deutsche Annington. To find out if these are the best ETF for you, visit our IPO Investing page.
