Five IPOs raised $565 million this past week. The deals average +30% from the offer price, while none broke issue and most priced above the midpoint of the range.
78 companies have gone public in the US this year, down 37% from this time last year but just one IPO shy of 2013's activity, a year that ultimately saw 222 IPOs. 2015 average IPO performance is near its highest point, averaging +22% from the offer price, including a +7% return available to retail investors after the first day close.
Health care remains the year's top sector (45% of IPOs), followed by financial (17%), while technology (13%) is quickly closing the gap made by the sector's anemic showing in the first quarter. After just one consumer IPO in the first quarter (SHAK; +259%), the sector continues to gain steam as four deals have priced in the second quarter. Another restaurant (FOGO) and a fast-growing consumer electronics company (FIT) are on the IPO calendar for next week.
WINGing it: Chicken wing chain flies up 61%
Wingstop (WING) couldn't be stopped - the fast casual chicken wing restaurant franchisor with 745 locations priced 46% above its original midpoint - the year's largest pricing premium - and proceeded to trade up 61%, the year's seventh-best first-day pop. PE backer Roark Capital sold 63% of the shares, and the public was all too eager to buy.
Billion-dollar Alzheimer's biotech IPO soars and crashes
Axovant's (AXON) 99% first-day pop was the fourth-best of 2015, but its 25% decline on Friday was the year's single worst second-day return. After three weeks without a biotech, Axovant raised $315 million - more than any other biotech IPO in at least 20 years. Both its deal size and IPO market cap were larger than the week's other four offerings combined. Only 2% of all biotech IPOs since 2000 have raised more than $200 million. These larger IPOs tend to do better initially; those that have raised over $100 million average a first-day pop of 29% compared to 8% for smaller deals. In this case, Alzheimer's disease represents a massive opportunity and well-respected investors RA Capital and Visium bought nearly 50% of the deal. Yet the biotech that bought its IP for just $5 million and attained a $3 billion valuation less than six months later appears to have overheated, as investors fled on the second day. For now, a 49% gain is still impressive for the 29-year old CEO and his well-compensated relatives/co-workers.
23 biotech IPOs have priced in 2015, down 30% from this point last year. However, proceeds by 2015 biotech IPOs are now 9% above last year.
Already traded in Europe, Parkinson's disease biotech Biotie (BITI) was up 29% by week-end after listing in the US. VC firms Versant and OrbiMed invested in May and again on the IPO. Two more foreign-listed Parkinson's biotechs are on the way (CYNA, INTP); we'll have to see how the market pans out for biotechs operating in the crowded yet enormous market for these therapies.
Raise your glass to PUB: Utah bank up 13%
People's Utah Bancorp (PUB) priced above its midpoint and traded up 13%. The only publicly-traded pure-play Utah bank became the fifth regional bank IPO of the year. Each of the five has gained 10% or more, and the group averages +18%. People's Utah stands to benefit from rising interest rates, which could drive interest in banks with similar assets. REITs and regional banks continue to dominate the IPO market's financial sector - both are above their respective levels at this point last year.
Invuity sheds light on the market for medical device IPOs
Invuity (IVTY) was the week's only IPO to price below the original range, and it stayed at $12 all through Friday. Backed by Wellington and KPCB, Invuity grew revenue at over 100% to $4.4 million in the first quarter, but investors may have been turned off by its lack of profitability for years out, a recent decline in gross margins and a CFO that plans to resign. Medical device IPOs average just 6% this year, and several more have had to postpone.
| 5 IPO pricings during the week of June 8, 2015 | |||||
| Company (Ticker) | Business | Deal size ($mm) | IPO price vs. midpoint | 1st-day pop | Return at 6/12 |
| Wingstop (WING) | High growth chicken wing chain | $110 | 46% | 61% | 61% |
| Axovant (AXON) | Alzheimer's biotech | $315 | 7% | 99% | 49% |
| Biotie Therapies (BITI) |
Parkinson's biotech | $56 | 0% | 38% | 29% |
| People's Utah Bancorp (PUB) | Utah bank with 18 branches | $36 | 4% | 15% | 13% |
| Invuity (IVTY) | Enhanced medical lights | $48 | -20% | 0% | 0% |
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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 2% 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 11% year-to-date, compared to 7% 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 this is the best ETF for you, visit our IPO Investing page.
