In another strong week for IPOs, six companies combined to raise $1.2 billion. Five of the six realized positive first-day returns, and three finished their first day up more than 40%. This active week brought the total of 2017 IPOs to 106, passing the total for all of 2016. This activity has also come with strong returns as the average 2017 IPO is up 25%.
We expect that activity will remain high as September has seen 28 new filings, the most since October 2015.
| 6 IPOs During the Week of September 25th, 2017 | |||||
| Issuer Business |
Deal Size ($mm) |
Market Cap at IPO ($mm) |
Price vs. midpoint |
First day return |
Return at 9/29 |
| Roku (ROKU) | $219 | $1,623 | 7.7% | 67.9% | 89.6% |
| Leading TV streaming platform in the US with over 5,000 channels. |
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| RYB Education (RYB) | $144 | $530 | 8.8% | 40.0% | 54.1% |
| Leading provider of early childhood education services in China. |
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| Nightstar Therapeutics (NITE) | $75 | $436 | 0% | 71.4% | 37.1% |
| UK biotech developing gene therapies for rare retinal diseases. |
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| NuCana (NCNA) | $100 | $526 | 0% | 7.7% | 22.5% |
| UK biotech developing second-generation chemotherapies for resistant tumors. |
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| Deciphera Pharmaceuticals (DCPH) | $128 | $599 | 6.3% | 3.8% | 11.7% |
| Developing kinase inhibitors for solid tumors. |
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| PQ Group Holdings (PQG) | $508 | $2,409 | -20.5% | -1.4% | -1.4% |
| Global producer of catalysts and other inorganic chemicals. |
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Roku (ROKU), a leading TV streaming platform in the US, raised $219 million at the $14 high end of its range. Roku shot up 68% on its first day and continued on to finish the week 90% above it offer price, which is good for the third best performance of the quarter. Investors were likely drawn to its strong monetization from a large and growing user base.
RYB Education (RYB)), a provider of early childhood education in China, priced above the range at $18.50 and raised $144 million. It popped 40% before closing the week up 54%. It is the latest Chinese education company to debut in the US, following Bright Scholar (BEDU; +126%) and China New Higher Education (COE; -26%). RYB has experienced strong growth in the large and growing Chinese education market and its peers have traded very well recently. Another Chinese educator, RISE Education (REDU), filed for an IPO last week. Insiders sold 29% of the deal.
Three biotechs IPO'd this week. Biotech IPOs have performed well in 2017, trading up an average of 46%.
Nightstar Therapeutics (NITE), which is developing gene therapies for rare retinal diseases, raised $75 million at the $14 midpoint and popped more than 70% on its first day, the second best of the year, before coming off its highs to end the week 37% above its offer price. Its treatment has showed durable results in Phase 1/2 trials, though its patient population totals just 30,000 in the US.
NuCana (NCNA), which is developing chemotherapies for resistant tumors, raised $100 million at the $15 midpoint. It finished the week a modest 22% above its offer price. It posted strong data from Phase 1 trials and is targeting large opportunities in cancer, though it faces stiff competition from generics in the space.
Deciphera Pharmaceuticals (DCPH), which is developing kinase inhibitors for solid tumors, raised $128 million by offering 7.5 million shares at $17. It had originally planned to offer 6.3 million shares at a $15-17 range. After pricing the upsized deal, it broke issue in early trading and finished the week just 4% above the offer price. It is targeting a large and growing kinase inhibitor market, though it faces significant competition for its indications including from close peer Blueprint Medicines.
PQ Group Holdings (PQG), a global producer of catalysts and inorganic chemicals, raised $508 million below the range at $17.50. It slipped down 1% to end the week. It has a leading market share in most of its key markets and boasts high EBITDA margins, but investors may be worried by stalling growth and high leverage.
IPO Pipeline Update: Four filings
Merchants Bancorp (MBIN), an Indiana bank, filed to raise $115 million. National Vision Holdings (EYE), a leading US discount optical retailer, filed to raise $100 million, though we note it could raise more. Chinese consumer lender Hexindai (HX) filed to raise $80 million. Engineering software provider Altair Engineering (ALTR) filed to raise up to $150 million.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is up 27.6% year-to-date, ahead of the S&P 500, which is up 12.1%. 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 24.9% year-to-date, while the ACWX is up 20.8%. 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.
