Just one new company is scheduled to price this week. Three small initial public offerings have delayed IPOs for two weeks or more, and again join the IPO calendar.
In the past week, the VIX Volatility Index fell to a 2-month low and the S&P 500 reached a 2-month high - roughly where each was before the market took a nosedive in August. Yet poor returns are haunting the IPO market: Just 37% of IPOs from 2015 trade above their offer price. IPO performance has not been lifted with the broader equity markets due to a decline in the health care (mostly biotech) and energy sectors. Since Labor Day, 76% of IPOs have priced below the range. 13 health care companies have gone public during this time, and 77% now trade below the offer price. Of the eight non-health care IPOs, only one is below its offer price.
Recent LBOs like Multi Packaging (MPSX; +22%), First Data (FDC; +2%) and Performance Food (PFGC; +17%) suggest that IPO investors could be receptive to the large, high-debt IPOs in the backlog like Petco (PETC.RC) and McGraw-Hill Education (MHED) if given a sufficient discount to peers. Biotechs have attempted to price despite the sharp sell-off, evidenced by this week's MyoKardia. The technology sector has been largely absent, but Pure Storage's (PSTG) 13% gain and a number of recent tech filings, notably Square (SQ), suggests a come back is in store. If the VIX stays low and the broader market continues to rise, 2015 could see a moderately strong showing of 30 more IPOs, bringing the total above 180.
The heart of the IPO market: Biotech MyoKardia looks to raise $75 million
MyoKardia (MYOK) is set to raise $75 million in the upcoming week at a valuation of $425 million. Those numbers could come down based on recent biotech IPO activity. Backed by Third Rock Ventures, MyoKardia is in Phase 1 trials for the heart condition hypertrophic cardiomyopathy. Top shareholder Sanofi intends to invest $25 million on the IPO. The company has raised almost $100 million in private funding so far. Third Rock Ventures has brought three biotechs public this year, including CytomX (CTMX; -19%) earlier this month, Global Blood Therapeutics (GBT; +129%) in August and Blueprint Medicines (BPMC; +23%) in April.
Three companies wait for their IPO window
Adesto Technologies (IOTS), which makes low-power flash memory chips for "Internet of Things" devices,
had originally been on the calendar for the week of October 12. Since then, it has added insider buying and lowered its proposed market cap by 53%. Profitable Chinese manufacturers Sole Elite Group (SOLE) and Fuling Global (FORK) could also price their delayed IPOs this week.
| Renaissance Capital's IPO Calendar - Week of October 26, 2015 | ||||
| Issuer Business |
Symbol Exchange |
Deal Size $mil |
Price Range Shares Filed |
Lead Managers |
| MyoKardia South San Francisco, CA |
MYOK Nasdaq |
$75 | $15 - $17 4,687,500 |
Credit Suisse Cowen & Company |
| Clinical-stage biotech developing therapies for heritable cardiomyopathies. | ||||
| Adesto Technologies Sunnyvale, CA |
IOTS Nasdaq |
$25 | $5 5,000,000 |
Needham Oppenheimer |
| Fabless provider of flash memory chips for Internet of Things devices. | ||||
| Sole Elite Group Jinjiang, China |
SOLE Nasdaq |
$33 | $10 - $12 3,000,000 |
Dawson James ViewTrade |
| Chinese athletic shoe sole manufacturer. | ||||
| Fuling Global Wenling, China |
FORK Nasdaq |
$20 | $5 4,000,000 |
Burnham Securities Network 1 Financial |
| Chinese producer of disposable plastic cutlery and other food service products. | ||||
| IPO ETF manager Renaissance Capital | ||||
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IPO pipeline update: The most active October for filings with a full week remaining
Companies hoping to go public before Thanksgiving had to have filed already, but October's 30 filings - tied with 2013 as the most active October in 10 years - suggest an active fourth quarter ahead. High-growth craft brewer Ballast Point (PINT) was the largest new filer, looking to raise $173 million. Energy MLPs have been a rare sight, but Noble Midstream Partners LP (NBLX) joined the pipeline. In addition, three biotech IPOs filed; Viventia Bio (VITA) and Kura Oncology (KURA) have set deal sizes of $86 million.
IPO Market Snapshot
152 IPOs have raised $28 billion in 2015, and the average IPO has a return of -5%. The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is down 7% year-to-date, compared to +1% for the S&P 500. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Alibaba (BABA), Twitter (TWTR) and Hilton Worldwide (HLT). The Renaissance International IPO Index is down 1% year-to-date, in line with the ACWX. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF Holdings include Recruit Holdings and Samsung C+T. To find out if this is the best ETF for you, visit our IPO Investing page.
