The shortened holiday week saw a lull in activity, with no US IPOs pricing and just three filings. Uncertainty related to the aftermath of the Brexit vote faded as the S&P 500 closed the week at 2,129, near its highest close ever.
The market has been slow for a few weeks, evidenced by the fact that just two companies have set terms in the last three weeks. For the third week straight, Gemphire Therapeutics (GEMP) and Tactile Systems Technologies (TCMD) pushed their IPOs to next week. Both deals are currently day-to-day. However, with June’s 17 IPO filings, there is reason for optimism going forward. Both Talend (TLND) and Yeti (YETI) will be eligible to set terms towards the end of the month, but all eyes are currently on LINE (LN), which is expected to price on July 11 and commence trading in New York on July 14.
In an otherwise slow week, SPACs were a bright spot. On the heels of last week’s announcement that Hostess will go public through Gores Holdings (GRSHU), M III Acquisition (MIIIU), a blank-check company led by turnaround expert Mohsin Meghji, raised $150 million this week. The sixth SPAC of 2016 showed that investors looking for lower-risk investments are still willing to place their money with strong management teams.
IPO Pipeline Update
Just three companies submitted initial filings this week. First Hawaiian Bank (FHB) filed with a placeholder deal size of $100 million; we estimate that it could raise as much as $1 billion. CBS Radio (CBSR.RC) also filed with a placeholder for an IPO that we estimate could raise as much as $500 million. The last filing, Forterra (FTRA.RC), which filed to raise up to $100 million, is the US division of a business that was bought by Texas-based Lone Star Funds. Lone Star bought predecessor Hanson Building Products from HeidelbergCement in March 2015 for $1.4 billion, and split the company into a UK division (Forterra; (FORT.LN)), which went public in London in April, and a US division.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is down 6% year-to-date, while the S&P 500 up 4%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Alibaba (BABA), Synchrony Financial (SYF) and Citizens Financial Group (CFG). The Renaissance International IPO Index is down 9.4% year-to-date (as of Thursday's close), compared to -2.1% (also as of Thursday) for ACWX. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Recruit Holdings, NN Group and Aena S.A.
