As many as three micro-cap companies could have listed on US exchanges in the past week, but none managed to price. They are now scheduled for the week ahead. The long-awaited US election likely deterred offerings, while the Thanksgiving holiday will dampen issuance for the remainder of the month. With just two deals so far, November is on track to be the slowest month for IPOs since the 1Q16, and the slowest November since 2008.
While the effects of a Trump presidency are still unknown, we note that several recent profitable small/mid-cap IPOs stand to benefit from his proposed 15% corporate tax rate.
IPO conditions improve
The Renaissance IPO Index surged 4.5% this past week, while the S&P 500 reversed its 9-day losing streak with a 3.8% gain. The VIX Volatility Index dropped below 15. While IPO filings have been slow for the past month, filings in the next two weeks will reveal which new companies are still targeting 2016 IPOs; Nasdaq's Vice Chairman stated that four or five tech IPOs would list on the exchange before year-end.
Notable earnings calls: 3 recent growth IPOs beat estimates this week
Acacia Communications (ACIA) climbed 13% this week; it again blew out earnings estimates on Thursday, but traded off 1% on Friday. The Trade Desk (TTD) jumped 8.6% on Friday after beating revenue estimates, but like most recent tech IPOs, it trades below its first-day close. e.l.f. Beauty (ELF) traded up 4% on Friday, surpassing its first-day close, after beating estimates and raising guidance.
US IPO Pipeline Update: WildHorse enters the fray
Three companies submitted initial filings this past week. WildHorse Resource Development (WRD), an oil and gas E&P backed by Natural Gas Partners, filed to raise $650 million. Other filers included newly-formed REIT Gadsden Growth Properties (GADS), hoping to raise $58 million, and offline-online services firm JWiz (JWIZ), targeting $12 million. Athene Holding (ATH) disclosed updated financial results ahead of its estimated $1 billion IPO. Univision (UVN) issued quarterly financials on its website, noting that its April debt amendment is contingent upon an IPO before December 15, while its Fusion subsidiary voted to unionize late in the week.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. While the IPO Index outperformed the S&P 500 in the past week, it is down 2% year-to-date, compared to the S&P's +6%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Citizens Financial Group (CFG) and Alibaba (BABA). The Renaissance International IPO Index is down 5% year-to-date, compared to 0% for the ACWI ex-US Index. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Recruit Holdings and Cheil Industries.
