Six IPOs raised $1.4 billion in the past week. The average deal priced 16% below its proposed midpoint, and the week's three large offerings each came in well below the range. The price cuts were enough for an average gain of 5%.
While there were no notable growth names to excite investors this week, two technology IPOs joined the US IPO calendar for the week of May 22: Software provider Appian (APPN) and semiconductor manufacturer SMART Global (SGH).
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| 6 IPOs During the Week of May 8th, 2017 | |||||
| Issuer Business |
Deal Size ($mm) |
Market Cap at IPO ($mm) |
Price vs. midpoint |
First day return |
Return at 5/12 |
| Guaranty Bancshares (GNTY) |
$54 | $292 | 0% | +11% | +15% |
| Texas bank with 26 locations and $1.8 billion in assets. |
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| Five Point Holdings (FPH) |
$294 | $1,971 | -26% | +7% | +14% |
| Owns and develops master-planned communities in coastal California. |
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| ASV Holdings (ASV) |
$27 | $69 | -22% | +12% | +12% |
| Designs and manufactures loader equipment under ASV, Terex and CAT brands. |
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| Gardner Denver Holdings (GDI) |
$826 | $4,022 | -18% | +6% | +6% |
| Global leading flow control and compression equipment manufacturer. |
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| Solaris Oilfield Infrastructure (SOI) |
$121 | $520 | -27% | -4% | -4% |
| Provides mobile frac sand storage silos used in oil and gas production. |
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| Veritone (VERI) |
$38 | $236 | 0% | -13% | -13% |
| Developing an AI platform that analyzes unstructured media data. |
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Gardner Denver (GDI) raised $826 million - 18% less than expected - when it priced below the range. One of the largest manufacturers of compression pumps and flow control equipment, the company traded up 6% on its debut. Gardner has significant exposure to the energy sector, a double-edged sword that can make or break its earnings results, while its industrials segment has been weak. However, it also boasts top positioning in its markets, and its strong cash flow alone will help drive earnings growth through debt pay-downs.
Five Point Holdings (FPH) priced $5 below the midpoint at $14 and finished the week up 14%. The IPO raised $294 million, plus $100 million in a concurrent private placement from top shareholder Lennar (NYSE: LEN). Insiders bought 19% of the offering. Its IPO market value of $2.0 billion was well below peers, likely due to early stage of its California communities.
Solaris Oilfield Infrastructure (SOI) priced 27% below the midpoint to raise $121 million, but still traded off 4%. The company provides mobile frac sand silos, a more efficient logistical solution for well fracking. Solaris has the potential for attractive EBITDA margins, but with just $18 million in 2016 sales and years of capex needed to build out its fleet, IPO investors demanded a steep discount to offset the risk that the energy rebound fails to materialize. Investors were also asked to stomach an IPO-funded distribution to insiders.
With the average 2017 oil and gas IPO down -2% from its offer price. Solaris' decline is more bad news for energy IPOs in the pipeline, and follows last week's the postponement of fracker Liberty Oilfield (BDFC). However, the year's top energy IPO, NCS Multistage (NCSM; +23% from offer price), shows that investors are willing to jump into the right story.
Guaranty Bancshares (GNTY) raised $54 million by pricing at the midpoint. The regional Texas bank ended the week with a solid gain of 14%. While its below-par efficiency ratio resulted in a lower-than-average ROE and P/E, the company looked more attractive on book value, and its experienced management team has demonstrated a consistent ability to grow assets.
ASV Holdings (ASV) returned to public markets this week with a $27 million IPO. It priced below the range at $7 for a market cap of $69 million. That was enough for it to trade up 12% on Friday. The manufacturer of loader machinery saw revenue decline 11% in 2016 to $104 million (10% EBITDA margin), but believes that its spin-off from Terex (NYSE: TEX) will allow it to focus on developing its own brand.
Veritone (VERI) doubled its IPO shares and priced at the midpoint to raise $38 million, the week's only offering to raise more proceeds than anticipated. It was also the week's worst performer, down 13% on its debut. With a fully diluted IPO market cap of $236 million and just $9 million in 2016 sales (down 36% from 2015), Veritone is a bet on an unproven AI platform.
Biotech Accelerated Pharma (ACCP) pushed its $12 million IPO to the week ahead, joining two other biotechs and a Chinese school operator.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is up 18.7% year-to-date, far ahead of the S&P 500, up 6.8%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Ferrari (RACE) and TransUnion (TRU). The Renaissance International IPO Index is up 12.6% year-to-date, while the ACWX is up 13.0%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include ABN Amro and Covestro. To find out if this is the best ETF for you, visit our IPO Investing page.
