A still fragile US IPO market will look to continue to find its footing this week.
Companies have experienced significant pricing pressure in the last few weeks, with 11 out of the last 13 IPOs pricing below the range. Next week, a highly-anticipated premier luxury brand, a specialty packaging company, and two biotechs plan to go public. Three other companies are listed as day-to-day, carryovers from this past week.
While the IPO market remains choppy and is being dictated by severe price concessions, there is reason to think that conditions may start to improve. Aftermarket returns are now trending positive and the closely watched volatility index has fallen to 15, its lowest level since July 2015. Filing activity also picked up materially over the past week, with new entrants from four tech firms. October has now seen 24 IPO filings through mid-month, up from 11 for all of September, and trending to be the busiest October since 2013, when 30 companies filed.
The Prancing Horse goes public
In one of the most highly-anticipated IPOs of the year, Ferrari (RACE) expects to raise $859 million. Owned by Fiat since 1969, this Italian luxury sports car maker is being spun off to unlock the value of one of the world's most coveted brands. The company maintains the exclusivity of its brand through production limits, shipping only 7,255 cars last year, and months-long waitlists. With the population of high-net-worth individuals growing worldwide, the company aims to increase shipments to Asia, especially China.
Is this the total package?
Multi Packaging Solutions (MPSX) is a global print-based specialty packaging company that makes premium print cartons, inserts, labels and rigid packaging. It was acquired by Madison Dearborn in 2013 and merged with Carlyle-backed Chesapeake in 2014 in a transaction that more than doubled its size. The company is targeting 2- % organic growth, but it plans to supplement growth with $50-$100 million in annual acquisitions. Next week, the company hopes to raise $300 million with primary proceeds expected to help reduce its $1.2 billion debt load.
Biotechs for humans and dogs
Dimension Therapeutics (DMTX) is a preclinical gene therapy biotech that selectively targets liver cells to deliver missing intact genes for rare diseases. The company submitted an IND in August 2015 for lead candidate DTX101 for hemophilia B, received Orphan Drug and Fast Track designations from the FDA, and plans to begin a Phase 1/2 trial by the end of 2015. It licenses its AAV vector gene delivery technology from REGENXBIO (RGNX), which completed an IPO in September 2015. REGENXBIO popped 38% in its debut, but it now trades 14% below its offer price. Backed by Fidelity and OrbiMed, Dimension looks to raise $83 million in what continues to be a tough market for biotech companies.
Oasmia Pharmaceutical (OASM), which is developing formulations of widely-used cancer drugs for humans and dogs, looks to raise $20 million in a US IPO. It amended its filing on September 15, targeting a mid-September IPO, only to push it back multiple times to this week. It already trades on Nasdaq Stockholm and the Frankfurt Stock Exchange.
Three companies are waiting for the opportune timing
Several companies are listed as day-to-day. This past week, Adesto Technologies (IOTS) decreased its range, then failed to price. The company, a fabless provider of flash memory chips for Internet of Things devices, hopes to raise $42 million. American Farmland Company (AFCO), an internally managed REIT formed to acquire and lease a diversified portfolio of US farmland, did not price as scheduled. It expects to raise $114 million in its offering. The last day-to-day company, China-based Sole Elite Group (SOLE), is a profitable designer and producer of foam and rubber shoe soles used to manufacture sports shoes. It expects to raise $33 million in its IPO.
IPO Pipeline Update: Meaningful filings pick up
In the past week, Albertsons (ABS) postponed its $ 1.6 billion IPO, but indicated it may relaunch in the coming weeks. Neiman Marcus Group (NMG) announced that it would push its IPO date back to early 2016. One of the few remaining mega LBOs from the 2006-2007 buyout boom, Univision (UVN) has yet to set a date for an IPO that we estimate could raise up to $1.0 billion. A diverse group of companies filed this week too: two LBOs, Station Casinos (STN.RC) and TransFirst; a spinoff, Match Group (MTCH); a high-profile unicorn, Square (SQ); and an assortment of biotech companies, a medical technology company, and two other technology companies.
| Renaissance Capital's IPO Calendar - Week of 10/19/2015 | ||||
| Issuer Business |
Symbol Exchange |
Deal Size $mil |
Price Range Shares Filed |
Top 2 underwriters |
| Ferrari Maranello, Italy |
RACE NYSE |
$859 | $48.00 - $52.00 17,175,000 |
UBS Investment Bank BofA Merrill Lynch |
| Italian luxury sports car manufacturer being spun off from Fiat Chrysler. | ||||
| Multi Packaging Solutions Int'l New York, NY |
MPSX NYSE |
$300 | $15.00 - $17.00 18,750,000 |
BofA Merrill Lynch Barclays |
| Global manufacturer of print-based packaging for consumer/health care products. | ||||
| Dimension Therapeutics Cambridge, MA |
DMTX Nasdaq |
$83 | $14.00 - $16.00 5,500,000 |
Goldman Sachs Citi |
| Developing novel, liver-directed gene therapies for rare genetic disorders. | ||||
| American Farmland Company New York, NY |
AFCO NYSE |
$48 | $8.50 - $10.50 12,000,000 |
Deutsche Bank Citi |
| Internally managed REIT with farmland in California, Illinois and Florida. | ||||
| Adesto Technologies Sunnyvale, CA |
IOTS Nasdaq |
$42 | $7.00 - $7.00 6,000,000 |
Needham Oppenheimer |
| Fabless provider of flash memory chips for Internet of Things devices. | ||||
| Oasmia Pharmaceutical Uppsala, Sweden |
OASM Nasdaq |
$13 | $5.75 - $7.75 1,925,925 |
Joseph Gunnar & Co. Rodman & Renshaw |
| Developing formulations of widely-used cancer drugs for humans and dogs. | ||||
| IPO ETF manager Renaissance Capital | ||||
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IPO Market Snapshot
The Renaissance IPO Index has traded down 6.9% year-to-date, compared to -2.1% 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 down 1% year-to-date, compared to -2.7% for the ACWX. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF Holdings include Recruit Holdings and Cheil Industries. To find out if this is the best ETF for you, visit our IPO Investing page.
