Eight companies went public in the year’s most active week. Three priced above the range and each finished above its IPO price (average return of 38%). Biotech Novan and ad-tech platform The Trade Desk led the group with a 67% and 65% first day pop, respectively. After disinterest earlier in the year, the IPO market is finally showing signs of strong initial demand. Post-Labor Day offerings have outperformed, with an average return of 30% and 100% trading above issue.
| IPO Pricings Week of September 19th, 2016 | |||||
| Issuer Business |
Deal Size ($mm) |
Market Cap at IPO ($mm) |
Price vs. midpoint |
First-day return |
Return at 9/123 |
| The Trade Desk (TTD) | $84 | $771 | +20% | +67% | +54% |
| Provides ad agencies with a programmatic platform for digital ads. |
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| Novan (NOVN) | $45 | $170 | -8% |
+65% | +83% |
| Late-stage biotech developing nitric oxide therapies for acne and other skin conditions. |
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| e.l.f. Beauty (ELF) | $142 | $836 | +13% | +56% | +49% |
| Sells trendy, low-cost cosmetics for the eyes, lips and face online and in mass retail. |
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| AC Immune (ACIU) | $66 | $633 | -8% | +42% | +42% |
| Swiss biotech developing therapies for Alzheimer's, partnered with Genentech. |
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| Apptio (APTI) | $96 | $674 | 14% | +41% | +41% |
| Provides enterprises with a cloud-based platform for managing IT assets. |
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| Gridsum Holdings (GSUM) | $87 | $405 | 13% | +21% | +21% |
| Offers a platform for marketing automation and keyword bidding in China. |
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| CapStar Financial (CSTR) |
$39 | $182 | -3% | +6% | +8% |
| Nashville, TN bank with seven locations and $1.3 billion in assets. |
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| Valvoline (VVV) | $660 | $4,400 | +2% | +5% | +5% |
| Manufacturer of automotive lubricants and quick lube chain spun out of Ashland. |
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The Trade Desk (TTD) priced above its original range, raising $84 million in the first ad-tech IPO in over a year. Its 67% first day pop (after raising its range) puts it second only to Twilio (TWLO) this year. Its combination of fast revenue growth (+93% in the MRQ), positive net income and a discounted valuation made it a rarity among tech offerings and a bright spot for the battered ad-tech sector.
Novan (NOVN) priced at the low end of its range but proceeded to climb 65% from its $45 million offering, the best first-day performance for a biotech since August 2015. Insiders took down 40% of the deal. Developing nitric oxide therapies for acne, its Phase 3 lead candidate would be the first new chemical entity for acne in over 20 years, if approved.
e.l.f. Beauty (ELF) raised $142 million after pricing above the range and closed up 56% on its opening day. The low-cost cosmetics provider has made major inroads at the nation's top retailers (Walmart, Target, and CVS), with plenty of room for growth. The company offers over 20% revenue growth and recorded revenue of $213 million and an EBITDA margin of 23% in the last twelve months.
AC Immune (ACIU) recorded a first day pop of 42% after raising $66 million by pricing its upsized offering at the low end of its range. The clinical stage biotech developing therapies for mild Alzheimer’s has so far shown promising results in staving off the loss of memory, cognition and function. Backed by two billionaires, insiders bought 32% of the offering.
Apptio (APTI) like Trade Desk priced above its range and raised $96 million, finishing its first day up 41%. Valued at a discount to its peers the IT financial management platform provider believes it can maintain its current growth rate.
Gridsum Holdings (GSUM) added insider buying the day before its IPO and priced above its range, raising $87 million on a slightly upsized share count. The platform for marketing automation and keyword bidding in China closed its first day up 21%, the best pop for a China-based US offering since 2014. While it faces high customer churn and increasing competition, it is a fast-grower in the underpenetrated Chinese market and may have benefited from The Trade Desk’s strong first day performance.
Valvoline (VVV) raised $660 million in the fourth largest deal this year. Spun off from parent Ashland, the company manufactures automotive lubricants and operates a quick lube chain under a well-known brand. The defensive company offers strong cash flow, which the market may reward with a premium.
CapStar Financial (CSTR) raised $39 million and gained 8% by week-end. The second Tennessee bank to go public this month after FB Financial (FBK), it focuses on the Nashville metro area with seven locations.
Pipeline Update
Three companies submitted initial filings this week. Continuing a pickup of IPO filings with energy exposure, frac sand supplier SmartSand (SND) filed to raise $100 million. SenesTech (SNES) is in the process of commercializing a pest control chemical, filed to raise $29 million. iRhythm (IRTC), which sells a cardiac arrhythmia monitoring device, filed to raise $86 million. The most notable launch was from Coupa Software (COUP), it is scheduled to raise $101 million in the first week of October.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is up 2% 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) and Citizens Financial Group (CFG). The Renaissance International IPO Index is flat year-to-date, compared to +5% for ACWX. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Recruit Holdings and Aena S.A. To find out if this is the best ETF for you, visit our IPO Investing page.
