No companies went public this week, but with five new filings the IPO market is already showing signs of an active September, particularly in the tech sector. The VIX Volatility Index is comfortably below 15, the average IPO from 2016 has returned 28% and four-fifths of deals trade above issue. For companies that have raised $100 million or more, the average return is an impressive 45%.
Tech IPOs are back
Tech IPO activity appears poised to pick up in the Fall. Including last Friday's filing from Everbridge (EVBG), four sizable (>$40mm) technology IPOs have filed in the past 7 days, compared to five from the rest of the year. The Trade Desk (TTD), an ad-tech platform looking to raise $86 million, is notable for its high growth and profitability. Apptio (APTI), a VC-backed enterprise software provider, filed to raise $75 million. Gridsum Holding (GSUM), an unprofitable but fast-growing Chinese web analytics and marketing automation platform, filed to raise $75 million.
Skin care: IPO filings from a makeup brand and dermatology biotech
e.l.f. Beauty (ELF), which sells low-cost cosmetics, also boasts relatively strong growth and EBITDA margins. Novan (NOVN), a late-stage biotech focused on skin conditions and backed by Malin Corp., filed to raise $60 million.
| Five IPO Filings During the week of August 22nd, 2016 | ||||||
| Issuer Business |
Deal Size ($mm) |
Industry | LTM Sales ($mm) |
EBITDA% | Last FY Growth |
Lead Underwriter |
| The Trade Desk (TTD) |
$86 | Tech | $149 | 32% | +156% | Citi |
| Provides ad agencies with a real-time bidding platform for multi-channel online ads. |
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| Apptio (APTI) | $75 | Tech | $143 | -14% | +21% | GS |
| Provides enterprises with a cloud-based platform for managing IT investments. |
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| Gridsum Holding (GSUM) | $75 | Tech | $45 | -6% | +75% | GS (Asia) |
| Offers a platform for marketing analytics and bidding on keyword searches in China. |
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| e.l.f. Beauty (ELF) | $100 | Consumer | $213 | 23% | +32% | JPM |
| Sells low-cost branded cosmetics for the eyes, lips and face. |
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| Novan (NOVN) | $60 | Health Care | $0 | - | - | Piper |
| Late-stage biotech developing nitric oxide based therapies for dermatologic indications. |
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IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is down 1% year-to-date, while the S&P 500 is up 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 down 1% year-to-date, compared to +4% for ACWX. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include NN Group and Aena S.A. To find out if this is the best ETF for you, visit our IPO Investing page.
