Seven deals raised a combined $1.2 billion this past week and first day returns averaged 16%. Performance was particularly strong for the healthcare space; Chinese cancer biotech Zai Lab led the pack, returning 55% on its first day, followed by Celcuity, which returned 50% and Krystal Biotech returned 6%. Latin American online travel agency Despegar.com was another notable deal, raising $332 million and returning 22% on its market debut. Chinese online luxury retailer Secoo Holding dropped 23% on its first day, the year's fourth-worst.
The year-to-date average IPO return remained strong at 23% and the average first day pop increased to 10%, driven in large part by the continued strong performance from biotechs.
| 7 IPOs During the Week of September 18th, 2017 | |||||
| Issuer Business |
Deal Size ($mm) |
Market Cap at IPO ($mm) |
Price vs. midpoint |
First day return |
Return at 9/18 |
| Seco Holding (SECO) | $111 | $673 | 4.0% | -23.1% | -23.1% |
| Chinese online retailer offering new and vintage luxury brands. | |||||
| Oasis Midstream Partners (OMP) | $128 | $468 | -15.0% | -1.5% | -1.5% |
| MLP formed by Oasis Petroleum to own oil and gas assets in the Williston Basin. | |||||
| Zai Lab (ZLAB) | $150 | $954 | 5.9% | 55.2% | 54.1% |
| Chinese cancer biotech advancing late-stage drugs licensed from large pharmas. | |||||
| Best (BSTI) | $450 | $3,879 | -28.6% | 5.2% | 20.5% |
| Alibaba-backed integrated logistics and supply chain solutions provider in China. | |||||
| Celcuity (CELC) | $23 | $94 | 5.6% | 50.4% | 43.5% |
| Developing live cell diagnostic tests for cancer patients. | |||||
| Despegar.com (DESP) | $332 | $1,749 | 6.1% | 22.2% | 23.7% |
| Leading online travel agency in Latin America. | |||||
| Krystal Biotech (KRYS) | $40 | $98 | 0.0% | 6.4% | 0.6% |
| Preclinical gene therapy biotech focused on dermatological diseases. | |||||
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Secoo (SECO), a Chinese online retailer offering a mix of new and vintage luxury brands, raised $111 million, pricing toward the high end of the range. The company fell 23% on its first day, the worst US debut for a Chinese company since 2010. Investors may have questioned its sales ramp given its recently slashed advertising spend and rising competition.
Oasis Midstream Partners (OMP), an MLP formed by Oasis Petroleum (NYSE: OAS) to own midstream assets in the Williston Basin, priced its units at $17, below the range of $19 to $21, to raise $128 million. Despite long-term operating contracts and an above-average yield of 8.8%, the stock proceeded to fall 1.5%, potentially a result of its assets' short operating history and the fact that much of the parent's acreage is dedicated to other midstream operators.
Zai Lab (ZLAB) priced its upsized IPO at the high end of the range, raising $150 million. Insiders bought $18 million on the offering (12% of the deal). The Chinese cancer biotech plans to commercialize three late-stage candidates in Hong Kong, Macau and China, including one that is already approved in the US. The stock popped 55% on its first day, likely a result of recent interest in Chinese biotechs, namely close peer BeiGene (BGNE: +255% from IPO).
Chinese logistics company Best (BSTI) raised $450 million after slashing its terms, removing insider selling and adding insider buying from key backer Alibaba. At $10, the company was valued at a discount to key peer ZTO Express (ZTO: -24%), and Best finished the week up 21%. While Best has best-in-class growth, its margins are currently well below peers.
Despegar.com (DESP), a leading online travel agency in Latin America, priced its IPO at the high end of its range, to raise $332 million and traded up 22% on its first day. Backed by Tiger Global, Despegar offers a unique play on Latin American travel and benefits from the ongoing recovery of the Brazilian economy. Offline travel peer CVC has gained 21% over the last month and Brazilian airline Azul (AZUL) is up over 40% from its March 2017 IPO.
Two micro-cap health care companies priced IPOs and traded up. Celcuity (CELC) raised $23 million and popped 50% on its first day, but gave back 6% in the aftermarket. The pre-revenue company is focused on discovering new sub-types of cancer with its proprietary CELx diagnostic platform, which uses live tumor cells to identify the specific cellular process driving a patient's cancer and the best targeted therapy to treat it. Preclinical gene therapy biotech Krystal Biotech (KRYS) raised $40 million in an upsized offering and the stock traded up 7% on its first day.
Three-wheel electric car developer Arcimoto (FUV) raised $20 million in a Reg A+ IPO, but fell 12% on its Nasdaq debut. We do not currently count Reg A+ offerings in our IPO stats.
IPO Pipeline Update: Eight filings feature Sea, Qudian, MongoDB
A diverse group of eight filings came in this week and plans to raise a combined $2.9 billion. Leading Southeast Asian entertainment startup Sea (SE) filed to raise $1.0 billion, while Chinese loan provider Qudian (QD) and Brazilian miner VM Holding (aka Nexa Resources; NEXA) could each raise up to $750. RISE Education (REDU) became this year's third Chinese education provider to file for a US IPO, following Bright Scholar Education (BEDU: +145% from IPO) and RYB Education (RYB: scheduled). Database platform MongoDB (MDB) filed for an estimated $150 million IPO; the tech unicorn could signal a pickup in the tech sector, following the prior week's initial filing from CarGurus (CARG).
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is up 27.5% year-to-date, ahead of the S&P 500, which is up 11.8%. 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 25.8% year-to-date, while the ACWX is up 20.3%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include ABN AMRO Group and Covestro. To find out if this is the best ETF for you, visit our IPO Investing page.
