The star was taken, but the show must go on.
Six companies went public this week, but AppDynamics (APPD) was notably missing as Cisco (Nasdaq: CSCO) acquired it for $3.7 billion the night before its scheduled pricing. Cisco paid a 68% premium to the high end of AppDynamics' upwardly-revised IPO range, and handed an 84% return to investors in the Oct./Nov. 2015 Series F round. While IPO investors missed out on the VC-backed tech deal's pop, the buzz ahead of the highly anticipated deal was a positive sign.
| 6 IPOs Priced During the Week of January 23rd, 2017 | |||||
| Issuer Business |
Deal Size ($mm) |
IPO Market Cap ($mm) |
Price vs. midpoint |
First day return |
Return at 1/27 |
| JELD-WEN (JELD) |
$575 | $2,500 | +5% | +14% | +14% |
| Global manufacturer of doors, windows and treated composite trim and panels. |
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| Jagged Peak Energy (JAG) | $474 | $3,067 | -12% | -4% | -4% |
| Oil and gas E&P operating in the Delaware Basin in West Texas. |
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| REV Group (REVG) | $275 | $1,463 | +10% | +14% | +14% |
| Leading manufacturer of emergency and specialty vehicles. |
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| Jounce Therapeutics (JNCE) | $102 | $553 | +14% | +8% | +8% |
| Early-stage biotech developing T cell immuno-oncology therapies with Celgene. |
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| ObsEva (OBSV) | $97 | $444 | 0% | -22% | -22% |
| Clinical-stage pharma developing therapies for women's reproductive health. |
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| AnaptysBio (ANAB) | $75 | $314 | 0% | +13% | +17% |
| Early-stage biotech developing antibodies for severe inflammatory conditions. |
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JELD-WEN (JELD), a global manufacturer of residential windows and doors, priced its $575 million offering at $23, above the range. The offering valued the 2011 Onex LBO at an enterprise value of $3.7 billion. JELD-WEN has a leading position in its markets and has seen strong adjusted EBITDA margin growth (11% in the 9mo16 vs 4% in 2013), and targets 15-20% in the long term.
Jagged Peak (JAG), an oil and gas E&P operating in the Permian Basin backed by Quantum Energy Partners, priced a downsized offering at $15, below the range, valuing the company at $3.1 billion. It finished the day down 4% which may reflect execution risk and weak receptions from recent E&P IPOs. It was also pitching a high valuation on its acreage and investors may have sensed a lack of confidence from insiders that were offering 31% of the deal.
REV Group (REVG) raised $275 million by offering 12.5 million shares at $22, above the range. This offering values the maker of fire trucks and ambulances at $1.5 billion. REV Group is a Milwaukee, WI-based consolidator that commands top positions in its markets. It had a first day pop of 14% and hopes to benefit from an underpenetrated $800 million annual aftermarket opportunity.
Three biotechs price, one doesn’t
AnaptysBio, which is developing antibodies for severe inflammatory conditions, finished the week up 17% after pricing at the midpoint. Jounce, which is collaborating with Celgene to develop T cell immunotherapies, gained 8% on its first day after pricing an upsized offering above the range. Swiss women's health biotech ObsEva plunged 22%; only one deal had a worse first day in all of 2016, it is developing therapies for women’s reproductive health and common pregnancy complications. Visterra (VIST) could not get its deal done despite insiders taking more than 50% of the offering and is now day-to-day.
The IPO pipeline
There were no new initial filings this week, but we expect new deals to begin entering the pipeline in early February. Three companies launched deals this week including Latin American power producer IC Power (ICP), metallurgical coal producer Ramaco Resources (METC) and Blackstone REIT Invitation Homes (INVH). Invitation Homes' $1.5 billion IPO would make it the largest IPO since October 2015.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is up 4.9% year-to-date, while the S&P 500 is up 2.5%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include First Data (FDC) and TransUnion (TRU). The Renaissance International IPO Index is up 3.6% year-to-date, while the ACWX is up 4.3%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Aena and ABN Amro.
