It's the final push for US IPOs before a four-week lull that should end in mid-September.
Five IPOs are on the calendar this week, plus two blank check companies. Sickle cell biotech Global Blood Therapeutics could attract investor attention, while investment bank Houlihan Lokey boasts a dominant position in mid-cap M&A. Our IPO poll takers agree.
Even without the annual late-summer pause in the IPO market, activity might have slowed down due to poor returns. In the past two weeks, five companies have postponed and more than half of the IPOs trade below the offer price. However, the IPO pipeline contains 115 companies, including a recent uptick in billion-dollar IPO filings, which indicates an active fourth quarter. With Labor Day four weeks away, the number of emerging-growth IPOs that file this week should also signal the IPO market's health.
Sick of sickle cell disease?
Global Blood Therapeutics (GBT), a relatively large biotech with promising results and prominent backers, has the most "pop-potential" out of any IPO this week. The company has received $100 million from Third Rock, Fidelity, Wellington, RA Capital and Deerfield. Larger biotechs have historically outperformed, and Global Blood has targeted a market cap of over $500 million. The biotech has successfully dosed six patients, but it could run into trouble if competitor bluebird bio (Nasdaq: BLUE) successfully develops its one-shot cure for sickle cell disease. In the past three years, Morgan Stanley has been a joint bookrunner on 10 biotech IPOs (average return of +140%) and Goldman Sachs has underwritten 8 (+215%).
An investment in an investment bank
Houlihan Lokey (HLI) expects to raise $300 million at a market cap of $1.5 billion, meaning it could raise more capital at a larger valuation than the week's other four IPOs combined. As the market leader in mid-cap M&A, Houlihan has seen its earnings soar thanks to a boom in US M&A activity. In addition, its low non-comp ratio suggests superior operating efficiencies. Close peer Moelis & Company (MC) gained 5% on its IPO in April 2014, and now trades 20% above the offer price. The selling shareholders, including Orix, executives and employees, will float the entire offering and receive an additional $270 million dividend while retaining 98% voting control.
Two microcap IPOs: Specialty insurance and interactive projectors
Conifer Holdings (CNFR) plans to raise $55 million, roughly half of its proposed market cap. Backed by CEO James Petcoff and Strength Capital Partners, the specialty property and casualty insurer has tripled its revenue since 2012, booking $61 million in 2014. Most insurance peers have sold off in the past month. Liquidated in 2013 and bought by Vert Capital, Boxlight (BOXL) expects that expanded school budgets should drive higher sales of its specialty projectors and other classroom materials.
IPO or bust: Breast implant company makes second attempt
GC Aesthetics (GCAA) has come back from its predecessors' bankruptcy as a major breast implant maker in Europe and South America, particularly Brazil. The company had been on the IPO calendar for last week, meaning investors may be pushing for a reduction in its proposed valuation despite the relatively strong performance of US peer and 2014 IPO Sientra (SIEN; +57% from the offer price).
| Renaissance Capital's IPO Calendar - Week of August 10, 2015 | ||||
| Issuer Business |
Symbol Exchange |
Deal Size $mil |
Price Range Shares Filed |
Top 2 bookrunners |
| Houlihan Lokey Los Angeles, CA |
HLI NYSE |
$300 | $22 - $24 13,059,139 |
BofA Merrill Lynch Goldman Sachs |
| Mid-cap focused independent investment bank. | ||||
| Global Blood Therapeutics South San Francisco, CA |
GBT Nasdaq |
$102 | $16 - $18 6,000,000 |
Morgan Stanley Goldman Sachs |
| Early-stage biotech developing a small molecule therapy for sickle cell disease. | ||||
| GC Aesthetics Dublin, Ireland |
GCAA Nasdaq |
$75 | $13 - $15 5,350,000 |
BofA Merrill Lynch Deutsche Bank |
| Provider of silicone breast implants in Latin America and EMEA. | ||||
| Conifer Holdings Birmingham, MI |
CNFR Nasdaq |
$55 | $11 - $13 4,600,000 |
BMO Capital Markets Raymond James |
| Specialty property insurance provider led by executives from North Pointe. | ||||
| Boxlight Lawrenceville, GA |
BOXL Nasdaq |
$20 | $10 - $12 1,818,182 |
Aegis Capital |
| Manufactures interactive projectors and other classroom materials. | ||||
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IPO pipeline update: 3 LBO'd companies including Neiman Marcus
More billion-dollar IPOs join the pipeline as Neiman Marcus (NMG) refiled for an initial public offering that could come near the end of September at the earliest. After ten years of private equity ownership, the company has achieved over $5 billion in annual sales. CD&R's Mauser Group (MAUS.RC), which makes industrial chemical containers, could raise $300 million. CPI Card Group (CPIC.RC), owned by Tricor Pacific Capital, is the largest maker of credit and debit cards in the US.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index has traded up 1.8% year-to-date, compared to 0.9% 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 4.6% year-to-date, compared to less than 1.9% for the ACWX. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF Holdings include Altice and Recruit Holdings. To find out if this is the best ETF for you, visit our IPO Investing page.
