After the year's longest stretch without an IPO, two companies are set to raise a combined $590 million in the week ahead. Blank check company Social Capital Hedosophia leads the way with a $500 million offering; newly-formed mortgage REIT Tremont Mortgage Trust aims to raise $90 million. Both IPOs are essentially blind pools, with investors betting on management's ability to find attractive assets.
While the IPO market has not immediately roared back to life, six IPOs are scheduled for the week of September 18, and recent filings indicate a likely surge heading into October. 15 companies have joined the IPO pipeline in the past two weeks, notably Roku (ROKU) and Switch (SWCH). Roughly half of these filings come from the health care sector; the 15 also include several small deals and foreign companies.
| US IPO Calendar | |||||
| Issuer Business |
Symbol Exchange |
Deal Size($m) Market Cap($m) |
Exp. Price Shares Filed |
Pricing Week |
Bookrunners |
| Social Capital Hedosophia Holdings Palo Alto, CA |
IPOA.U NYSE |
$500 $625 |
$10 50,000,000 |
9/11/17 | Credit Suisse |
| Blank check company planning to acquire a large private technology company. | |||||
| Tremont Mortgage Trust Newton, MA |
TRMT Nasdaq |
$90 $100 |
$20 4,500,000 |
9/11/17 | UBS Investment, Citi, RBC Capital |
| Newly-formed commercial mortgage REIT controlled by RMR Group. | |||||
Social Capital Hedosophia Holdings (IPOA.U) plans to bring a unicorn public by raising $500 million to be used for an acquisition. Despite poor trading from Snap (SNAP) and Blue Apron (APRN), Social Capital argues that the valuation discount demanded by IPO investors has kept unicorns in hiding. Social Capital's Chamath Palihapitiya is leading the deal; he was an early investor in companies such as Box (NYSE: BOX), Yammer and Slack. With 20 SPAC IPOs year-to-date, 2017 is the most active year for blank checks in a decade and Social Capital Hedosophia's $500 million offering would make it the year's third largest.
Tremont Mortgage Trust (TRMT) plans to raise $90 million in IPO proceeds and at least $10 million from external manager RMR Group (Nasdaq: RMR), resulting in the company's $100 million post-IPO market cap being equivalent to its cash. The mortgage REIT is newly-formed and has not identified an initial portfolio. Tremont will be the fifth mortgage REIT to IPO this year; the prior four all trade within 3% of their IPO prices.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is up 25.6% year-to-date, ahead of the S&P 500, which is up 9.9%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Ferrari (RACE) and First Data (FDC). The Renaissance International IPO Index is up 24.0% year-to-date, while the ACWX is up 18.7%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include ABN AMRO Group and Worldpay.
