Four IPOs are on the calendar to raise nearly $900 million in the week ahead. Three are profitable, including the fourth-largest offering of 2016 and two companies that grew more than 30% in the MRQ. A biotech with heavy insider buying will also come to market, another IPO in the most active sector of 2016 (39% of deals).
Markets are near all-time highs, 2016 IPOs have outperformed (up 19% on average) and the VIX Volatility Index is at its lowest point since August 2015. Even so, we expect only a moderate pick-up in IPO activity; issuers remain cautious and IPO buyers remain sensitive to valuations.
| Renaissance Capital's IPO Calendar - Week of 7/18/2016 | ||||
| Issuer Business |
Symbol Exchange |
Deal Size $mil |
Price Range Shares Filed |
Lead Managers |
| Patheon Amsterdam, Netherlands |
PTHN NYSE |
$625 | $19 - $22 30,487,804 |
J.P. Morgan Morgan Stanley |
| Global provider of contract drug manufacturing and development services. | ||||
| TPI Composites Scottsdale, AZ |
TPIC Nasdaq |
$116 | $15 - $17 7,250,000 |
J.P. Morgan Morgan Stanley |
| Largest independent US manufacturer of composite wind blades. | ||||
| Audentes Therapeutics San Francisco, CA |
BOLD Nasdaq |
$75 | $14 - $16 5,000,000 |
BofA Merrill Lynch Cowen & Company |
| Preclinical biotech developing gene therapies for rare diseases. | ||||
| Impinj Seattle, WA |
PI Nasdaq |
$60 | $12 - $14 4,600,000 |
RBC Capital Markets Pacific Crest |
| Leading provider of radio-frequency identification tags and reader chips. | ||||
| Tactile Systems Tech (Day-to-Day) Minneapolis, MN |
TCMD Nasdaq |
$60 | $14 - $16 4,000,000 |
Piper Jaffray William Blair |
| Sells at-home compression therapy devices for vascular swelling. | ||||
| Gemphire Therapeutics (Day-to-Day) Northville, MI |
GEMP Nasdaq |
$45 | $11 - $13 3,750,000 |
Jefferies RBC Capital Markets |
| Developing a novel nonstatin therapy to treat high cholesterol. | ||||
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International drug trade: Patheon to go public
Patheon (PTHN) - One of the world's largest contract drug manufacturers is set to raise $625 million in one of the year's largest IPOs. LBO'd in 2013, Amsterdam-based Patheon offers a unique proposition for top pharmas: It develops drug formulations, creates the active ingredients and then provides large-scale manufacturing and packaging. While it expects to generate strong cash flows in a stable and growing industry, Patheon struggled to generate organic growth more recently, and will remain highly levered after the IPO (5.9x LTM adj. EBITDA) thanks to insider distributions. We note that 18 of the 20 IPOs this year that raised over $100 million have a positive return, and an average gain of +33%.
Life of PI: VC-backed tech IPO Impinj
Impinj (PI) - The dominant provider of RFID location tags (often used to prevent shoplifting) is set to raise $60 million at a market cap of about $250 million. The company has generated a profit for three consecutive years, and grew sales by 34% to $22 million in the first quarter. Backed by ARCH, Polaris and Intel, Impinj will be only the fourth VC-backed tech IPO of the year, a group that includes 2016's two best-performing deals, Twilio (TWLO; +187%) and Acacia Communications (ACIA; +138%). As we noted in our mid-week blog post, the last 10 tech IPOs have positive returns, now averaging +56%.
TPI Composites: A new spin on wind blades
TPI Composites (TPIC) - This former powerboat manufacturer aims to raise $116 million and become the only public pure-play wind blade manufacturer in the US. TPI mainly supplies four large wind turbine companies (93% of revenue), and revenue soared 83% to $586 million in 2015 on strong tailwinds, including an industry shift to outsourcing and clean-energy subsidies. However, as IPO Intelligence users know, government benefits are currently up in the air, and set to begin expiring in the US in 2017.
BOLD move from preclinical biotech Audentes
Audentes Therapeutics (BOLD) - Backed by OrbiMed, this gene therapy biotech plans to raise $75 million in the week ahead as it prepares Phase 1 trials for rare diseases. The year's other developer of gene therapies, AveXis (AVXS), is the best-performing biotech of 2016 (+76%), though other peers Dimension Therapeutics (DMTX) and REGENXBIO (RGNX) are down 39% and 52%, respectively, this year. Insiders are taking down up to 40% of the IPO.
Two small-cap healthcare companies, Gemphire Therapeutics (GEMP) and Tactile Systems Technology (TCMD), are still seeking to price their IPOs on a day-to-day basis.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index has outperformed the S&P 500 in the past month (+5% vs. +4%), though it has undperformed the S&P year-to-date (-4% vs. +6%). 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 currently lagging the ACWX on both a 1-month (+1% vs. +4%) and year-to-date (-4% vs. +1%) basis. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Recruit Holdings, NN Group and Aena S.A.
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