The steady flow of IPOs in the 4Q is set to continue with six companies in six different sectors scheduled to raise a combined $2.1 billion in the week ahead. The diverse collection includes unicorn ForeScout Technologies (FSCT), an enterprise security software provider that hopes to follow the success of the most recent unicorn to IPO, MongoDB (MDB), which priced last week and popped 34% on its first day. Sectors in the week ahead include technology, consumer retail, energy, financials, materials and health care. Two blank check companies, a Reg A+ IPO and a small Chinese peer-to-peer lending platform are also expected to price.
After a flurry of filings the week of October 9, there are several high profile IPOs that could launch within the week. These include pop culture merchandise developer Funko (FNKO) and integrated circuit provider Aquantia (AQ); following with the recent stream of health care deals, three more biotechs, Spero Therapeutics (SPRO), Allena Pharmaceuticals (ALNA) and Erytech Pharma (ERYP) could also launch in the coming week.
| IPO Calendar | |||||
| Issuer Business |
Symbol Exchange |
Deal Size($m) Market Cap($m) |
Price Range Shares Filed |
Pricing Week |
Bookrunners |
| CM Seven Star Acquisition Hong Kong |
CMSSU Nasdaq |
$150 $192 |
$10 15,000,000 |
10/23 | EarlyBirdCapital |
| Chinese blank check company managed by an affiliate of China Minsheng Investment Group. | |||||
| Ablynx Belgium |
ABLX Nasdaq |
$150 $1,354 |
$19.08 7,861,635 |
10/23 | BofA Merrill J.P. Morgan Jefferies |
| Belgian biotech developing single-domain antibodies for various diseases. | |||||
| Haymaker Acquisition New York, NY |
HAYU Nasdaq |
$300 $375 |
$10 37,500,000 |
10/23 | Cantor Fitzgerald |
| Blank check company created by the former CEO of Starwood Hotels. | |||||
| BP Midstream Partners LP Houston, TX |
BPMP NYSE |
$850 $2,095 |
$19.00 - 21.00 42,500,000 |
10/23 | Citi Goldman Sachs Morgan Stanley |
| MLP formed by BP to own pipeline for crude oil and refined products. | |||||
| National Vision Holdings Duluth, GA |
EYE Nasdaq |
$300 $1,522 |
$18.00 - 20.00 15,800,000 |
10/23 | BofA Merrill, Goldman Sachs Citi |
| Discount optical retailer and eye care provider LBO'ed by KKR. | |||||
| ForeScout Technologies San Jose, CA |
FSCT Nasdaq |
$101 $942 |
$20.00 - 22.00 4,800,000 |
10/23 | Morgan Stanley J.P. Morgan Citi |
| Provides enterprise security software for network access control. | |||||
| Merchants Bancorp Carmel, IN |
MBIN Nasdaq |
$100 $487 |
$17.00 - 19.00 5,555,555 |
10/23 | Sandler O'Neill Stephens Inc. Raymond James |
| Indiana bank focused on FHA loans and warehouse mortgage financing. | |||||
| Nexa Resources Brazil |
NEXA NYSE |
$605 $2,600 |
$18.00 - 21.00 31,000,000 |
10/23 | J.P. Morgan BMO Capital Morgan Stanley |
| Leading Brazilian miner of zinc and other metals being spun out of Votorantim. | |||||
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Cybersecurity unicorn ForeScout Technologies (FSCT) is a next-generation network access control vendor that seeks to benefit from the proliferation of the internet-of-things. The company grew sales 32% in the 1H17 and boasts 128% net recurring revenue retention. In addition, the valuation looks strong, but we note its long sales cycle and heavy losses as key concerns. The most recent unicorn to IPO, MongoDB, had a strong first day (+34%) after pricing at $24, well above its original $18-20 range.
BP Midstream Partners (BPMP) is the largest deal of the week and aims to raise $850 million. The MLP, which is being formed as a growth vehicle for BP, benefits from fee-based contracts that will limit its commodity exposure as well as heavy volume commitments for 2018. However, peer trading has not been strong for MLPs, and distribution rights held by BP may cut into this MLP’s payout upside.
National Vision Holdings (EYE) is the leading retailer in the discount optical market. Strengths include a predictable sales cycle and a proven business model to efficiently open and scale new stores. Over the past 10 years, the company has grown at a 6.6% CAGR and it operates 980 retail stores. However, we note its high debt load (4.3x LTM EBITDA) and negative comparable store sales in its Walmart Vision Centers segment as key concerns.
Brazilian zinc miner Nexa Resources (NEXA) aims to raise $604 million. The company is a play on the recent favorable supply and demand dynamics for zinc, which caused prices to rise 56% in 2016 and 31% year-to-date. It will be dual-listing on the NYSE and TSX.
Merchants Bancorp (MBIN) has grown deposits at a 31% CAGR since 2012. The Indiana bank benefits from its online, low-cost structure which allowed it to achieve a 27% efficiency ratio in the 1H17. It aims to raise $100 million.
Belgian biotech Ablynx (ABLX) aims to raise $150 million. It is currently traded on the Euronext Brussels under the symbol ABLX, and booked $78 million in revenue for the 12 months ended June 30, 2017. Following the offering, the company, which is developing single-domain antibodies for various diseases, would command a market value of roughly $1.5 billion.
Two SPACs, CM Seven Star Acquisition (CMSSU) and Haymaker Acquisition (HAYU) aim to raise $150 million and $300 million, respectively. CM Seven Star is sponsored by Shareholder Value Fund, which is managed by a subsidiary of China Minsheng Investment Group (HK: 245). Haymaker will be run by CEO Steven Heyer and President Andrew Heyer with a 20% post-IPO stake. Steven Heyer previously served as the CEO of Starwood Hotels & Resorts from 2004 until 2007. Andrew Heyer currently serves as the CEO of Mistral Equity Partners, which he founded in 2007.
Reg A+ IPO Fatburger (FAT), which operates 300 restaurants, mainly under the Fatburger and Ponderosa brands, is also expected to price and begin trading this week.
Hexindai (HX), which operates a Chinese marketplace for peer-to-peer lending, aims to raise roughly $60 million in a best-efforts, min-max offering.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is up 33.7% year-to-date, ahead of the S&P 500, which is up 15.0%. 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 27.1% year-to-date, while the ACWX is up 22.0%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include ABN AMRO Group and Covestro.
