Coming off a busy week for IPOs, only two deals looking to raise $425 million are on the calendar in the week ahead. GDS Holdings (GDS), a leader in the Chinese market for high-performance carrier-netural data centers, is targeting a $1.7 billion market opportunity which is estimated to grow 20%+ moving forward. Smart Sand (SND), a miner and processor of frac sand for US shale drilling, is coming to market shortly after two other energy IPOs, Extraction Oil & Gas (XOG) and Mammoth Energy Services (TUSK), which are up 15% and down 6%, respectively, from their IPOs.
While October was the busiest month for IPOs this year with 19 pricings, we expect the beginning of November to start slowly given the Presidential elections on November 8. Additionally, there have been only seven initial filings in October (versus 18 in September), which, along with the Thanksgiving holiday, may lead to a slow November on the whole.
| US IPO Calendar Week of October 31, 2016 | |||||
| Issuer Business |
Symbol Exchange |
Deal Size($m) Market Cap($m) |
Price Range Shares Filed |
Bookrunners | |
| GDS Holdings China |
GDS Nasdaq |
$250 $1,237 |
$12 - 14 19,250,000 |
Credit Suisse, J.P. Morgan, Citi, 2 more... |
|
| Leading provider of high-performance carrier-neutral data centers in China. | |||||
| Smart Sand The Woodlands, TX |
SND Nasdaq |
$175 $588 |
$15 - 18 10,615,152 |
Credit Suisse, Goldman Sachs, Jefferies, 3 more... |
|
| Mines and processes raw frac sand used in oil and gas drilling. | |||||
GDS Holdings (GDS) - Led by its founder, GDS is a high-growth operator offering colocation services, including space, power and cooling for customers' servers, as well as managed hosting & cloud services and IT equipment. GDS' client base consists of 370 companies, mainly internet and financial, among which it had 95% revenue retention in colocation services in 2014 and 2015. During the six months ended June 30, 2016, net revenue rose 47% to $66 million, though gross margin contracted and operating loss turned negative from breakeven.
Smart Sand (SND) - Formed by private equity firm Clearlake, this company has been mining and processing Northern White raw frac sand, mostly used in oil and gas drilling, at its facility in Wisconsin since 2012. Based on its 3.3 million tons of annual sand processing capacity and 244 million tons of proven reserves, Smart Sand has a reserve life of 73 years. In the 1H16, it had only six customers, including top three customers US Well Services (37% of sales), Weatherford (25%) and C&J Services (18%), and revenue fell 20% to $19 million. While still well below peak levels, key sand peers Fairmount Santrol, US Silica, Hi-Crush and Emerge Energy have traded strongly recently, up 33-55% in the last three months.
Of note next week is the quiet period expiration for Coupa Software (COUP) on Monday, October 31. Coupa has returned 41% since its October 5 IPO.
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The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is down 3% year-to-date, while the S&P 500 is up 4%. 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 down 2% year-to-date, compared to +3% for 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.
