In another active week for the IPO market, six companies in six different sectors raised over $2 billion. Boasting strong comp growth, National Vision (EYE) was the top performer with a 28% gain as investors put a premium on the Amazon-proof retailer. The week's other two growth stories, cybersecurity unicorn ForeScout Technologies (FSCT) and antibody biotech Ablynx (ABLX), were also well received. The other three deals, an MLP, a Brazilian miner and a mortgage originator all priced below their ranges, the first to do so in a month.
Aftermarket return for recent IPOs has taken a hit. The aftermarket return for IPOs over the past 90 days averaged 12% at October 6, but it has since dropped to -8%. We partially attribute this decline to high first day pops, with first day returns averaging +20% over the past 90 days. Last week's three Asian deals notably priced above the range and initially traded up, but now trade below issue. Recent tech deals MongoDB (MDB) and Roku (ROKU) have also slipped below their first-day close.
The 4Q17 is shaping up to be a busy quarter for IPOs after the pickup in filing activity over the past two months. The 30 initial filings this October are the most since October 2015 (30 filings). Following 27 filings in September, 56 companies are now in our active pipeline of companies that have filed updates within the past 90 days.
| 6 IPOs During the Week of October 23rd, 2017 | |||||
| Issuer Business |
Deal Size ($mm) |
Market Cap at IPO ($mm) |
Price vs. midpoint |
First day return |
Return at 10/27 |
| National Vision Holdings (EYE) | $348 | $1,754 | +16% | +27% | +28% |
| Value-focused optical retailer and eye care provider LBO'd by KKR. |
|||||
| Ablynx (ABLX) | $200 | $1,291 | 0% | +29% | +17% |
| Developing single domain antibodies derived from llamas for various diseases. |
|||||
| ForeScout Technologies (FSCT) | $116 | $1,000 | +5% | +16% | +16% |
| Provides enterprise security software for network access control. |
|||||
| Nexa Resources (NEXA) | $496 | $2,133 |
-18% | +9% | +9% |
| Leading Brazilian miner of zinc and other metals being spun out of Votorantim. | |||||
| Merchants Bancorp (MBIN) | $100 | $444 | -11% | +5% | +5% |
| Indiana bank focused on FHA loans and warehouse mortgage financing. | |||||
| BP Midstream Partners LP (BPMP) | $765 | $1,886 | -10% | -4% | -2% |
| MLP formed by BP to own pipelines for crude oil and refined products. |
|||||
Find out why institutional investors rely on Renaissance Capital's Pre-IPO Research for these IPOs. Follow us on Twitter (@IPOtweet) for IPO news as it happens and register for our updates on the IPO market. Sign up here to be notified when we launch IPO Pro in November.
National Vision Holdings (EYE) raised $348 million in an upsized deal that priced above the range at $22. The KKR LBO popped 27% in its first day. The pricing and trading reflect investor demand for the Amazon-proof optical retailer and eye care provider that has generated 62 consecutive quarters of comparable store sales growth.
ForeScout Technologies (FSCT), an enterprise security software unicorn, raised $116 million in its IPO. After pricing at the high end of the range, the company added momentum to the recent tech rally and traded up 16%. The leading next-generation network control vendor generated 82% of 2016 sales from existing customers, and its high recurring revenue retention likely aided the company's warm reception.
Dutch biotech Ablynx (ABLX) raised $200 million in its US offering, making it the largest biotech IPO of 2017. Listed on the Euronext Brussels since 2007, it is developing single domain antibodies to target a range of hematology, inflammation and infectious disease indications. Biotechs have been the best performing sector year-to-date (+36%), and Ablynx popped 29% before finishing the week up 17%. The company has seen positive results from its lead candidate and formed partnerships with leading pharmas, but its losses are substantial and expected to continue in the near term.
BP Midstream Partners LP (BPMP) priced a $765 million IPO below the range that valued the MLP at roughly $1.8 billion. Despite its well-known parent, the stock broke its issue price on its first day of trading (-4%), following the trend of the three other midstream MLPs to come public this year, which are down -12% on average. At IPO, its yield was 5.8%.
Merchants Bancorp (MBIN) priced below its range at $16 to raise $100 million at a $444 million market value, before trading up slightly on its first day. The company benefits from a low cost structure (27% efficiency ratio in the 1H17) and a long-tenured management team, but its dependence on mortgage origination volume leaves it exposed to cyclicality in mortgage demand.
Brazilian miner Nexa Resources (NEXA) also priced a downsized IPO, raising $496 million; it then traded up 9% on its first day. Nexa offers a play on the recent rise in zinc prices, which increased 56% in 2016 and are up over 30% year-to-date. However, the company has also seen higher operational costs due to environmental and safety regulations.
IPO Pipeline Update
Five companies submitted initial filings this week. BGC Partners' commercial real estate brokerage Newmark Group (NMRK) filed to raise $600 million. Bluegreen Vacations (BXG), which sells timeshares and resorts, filed to raise $100 million. Payday lender Curo Group Holdings (CURO) aims to raise $100 million. Newly-formed reinsurer Insurance Income Strategies (ILS) filed to raise $58 million. Heart failure biotech scPharmaceuticals (SCPH) filed to raise $100 million.
This week we added four companies to our Private Company Watchlist (only available on IPO Intelligence). These include a top Indonesian e-commerce site, a Vietnamese online gaming platform, a Chinese financial services platform and an Appalachian Basin-focused E&P.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is up 34.1% year-to-date, ahead of the S&P 500, which is up 15.3%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include First Data (FDC) and Square (SQ). The Renaissance International IPO Index is up 26.5% year-to-date, while the ACWX is up 21.8%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Japan Post and ABN AMRO Group. To find out if this is the best ETF for you, visit our IPO Investing page.
