The IPO market's active fourth quarter continues with another busy week. As many as nine IPOs plan to raise $2.1 billion. This week features three growth IPOs, all with positive operating income: toy maker Funko (FNKO), chip producer Aquantia (AQ) and software seller Altair Engineering (ALTR). Two large industrial plays each aim to raise over $500 million: Argentine cement producer Loma Negra (LOMA) and water treatment company Evoqua (AQUA). Two biotechs are also coming public, an industry that has seen strong interest from IPO investors.
On Friday, three deals joined the IPO calendar for the week of November 6, including China's Sogou (SOGO) and Four Seasons Education (FEDU). More should launch in the week ahead as companies look to price before Thanksgiving. This week, the following deals become free to launch IPO roadshows: communication tech provider Bandwidth (BAND), Chinese P2P lender PPDAI (PPDF), suburban REIT Workspace Property Trust (WSPT), Texas bank CBTX (CBTX) and biotechs Apellis Pharmaceuticals (APLS) and InflaRx (IFRX). E-mail marketing platform SendGrid (SEND) and online clothing retailer StitchFix (SFIX) can launch later in the week.
| IPO Calendar | |||||
| Issuer Business |
Symbol Exchange |
Deal Size($m) Market Cap($m) |
Price Range Shares Filed |
Bookrunners | |
| Altair Engineering Troy, MI |
ALTR Nasdaq |
$144 $861 |
$11.00 - 13.00 12,000,000 |
J.P. Morgan RBC Capital Deutsche Bank |
|
| Provides high-end enterprise-class engineering software. | |||||
| Loma Negra Argentina |
LOMA NYSE |
$751 $2,026 |
$15.00 - 19.00 44,200,000 |
BofA Merrill Bradesco BBI Citi |
|
| Leading Argentine cement producer. | |||||
| Allena Pharmaceuticals Newton, MA |
ALNA Nasdaq |
$80 $329 |
$14.00 - 16.00 5,333,333 |
Credit Suisse Jefferies Cowen |
|
| Developing enzymes for rare and severe metabolic and kidney disorders. | |||||
| Evoqua Water Technologies Pittsburgh, PA |
AQUA NYSE |
$500 $2,182 |
$17.00 - 19.00 27,777,776 |
Credit Suisse J.P. Morgan RBC Capital |
|
| Provides water treatment systems and services. | |||||
| Funko Everett, WA |
FNKO Nasdaq |
$200 $735 |
$14.00 - 16.00 13,333,334 |
Goldman Sachs J.P. Morgan BofA Merrill |
|
| Designs and sells licensed pop culture collectibles. | |||||
| Spero Therapeutics Cambridge, MA |
SPRO Nasdaq |
$75 $215 |
$14.00 - 16.00 5,000,000 |
BofA Merrill Cowen Stifel |
|
| Developing treatments for drug-resistant bacterial infections. | |||||
| ACM Research Fremont, CA |
ACMR Nasdaq |
$17 $148 |
$7.50 - 9.50 2,000,000 |
Roth Capital | |
| Sells single-wafer wet cleaning equipment to semiconductor manufacturers. | |||||
| Aquantia San Jose, CA |
AQ NYSE |
$75 $385 |
$10.00 - 12.00 6,818,000 |
Morgan Stanley Barclays Deutsche Bank |
|
| Fabless provider of 10Gbps Ethernet ICs. | |||||
| Sentinel Energy Services Houston, TX |
STNLU Nasdaq |
$300 $375 |
$10.00 30,000,000 |
Citi Goldman Sachs Credit Suisse |
|
| Energy-focused blank check company created by former Schlumberger executives. | |||||
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Three Growth IPOs: Bobbleheads, software and semiconductors
Funko (FNKO) seeks to raise $200 million. Funko designs and sells pop culture collectibles and accessories licensed from over 100 of the top media and content providers, like Marvel, Sony, DreamWorks, Disney and HBO. It has generated strong top-line growth (+55% in 2016) from its Pop! figures (68% of 1H17 sales). However, revenue has been volatile given the hit-driven nature of its industry and US sales were essentially flat in the 1H17.
Altair Engineering (ALTR) plans to raise $144 million. Founded in 1985 by its current CEO, Altair provides high-end engineering software to top automotive and aerospace firms. Contrasting the high-growth, high-loss software IPOs from earlier this year, Altair grew sales by 6.5% in 2016 to $313 million, with $10 million in net income. While recent investments in sales and market drove 10% billings growth during the 1H17 (+10%), margins have been pressured and operating income swung negative.
Aquantia (AQ), which provides high-performance integrated circuits, plans to raise $75 million at a market cap of $385 million. The semiconductor company stands to benefit from an industry-wide upgrade to multi-gigabit Ethernet connectivity. In the 1H17, sales grew 18% to $49 million, with $2 million in adjusted EBITDA. It boasts a strong relationship with Intel and Cisco, but that selling point is a double-edged sword: those two customers were 92% of 1H17 sales. The relatively small company will also face competition from much larger players.
Micro-cap semiconductor equipment maker ACM Research (ACMR) is raising $17 million. Sales fell 12% in 2016 when its largest customer cut orders, but revenue jumped 78% in the 1H17 to $14 million.
Two large industrial IPOs
Leading Argentine cement producer Loma Negra (LOMA) plans to raise $751 (100% insider) in a global IPO (total deal size is $853 million). The company controls 45% of the Argentine cement market and expects to benefit from rising demand and government infrastructure spending estimated at $155 billion over the next ten years. Loma Negra is being carved out of Intercement, a unit of Brazilian conglomerate Camargo Correa.
Evoqua Water Technologies (AQUA) plans to raise $500 million. Acquired by PE firm AEA from Siemens in 2014 for $731 million, Evoqua provides products (52% of FY16 revenue) and services (48%) primarily used to purify water for drinking or industrial use and to treat and recycle wastewater. During the nine months ended June 30, 2017, revenue rose 9% to $891 million, driven almost entirely by acquisitions. At quarter-end, Evoqua had post-IPO net debt of $690 million.
Two biotechs: Kidney disease and drug-resistant infections
Allena Pharmaceuticals (ALNA) plans to raise $80 million. The biotech's lead product candidate targets elevated oxalate (hyperoxaluria), which can lead to kidney stones and chronic kidney disease. Backed by Frazier Healthcare Partners, Third Rock and Fidelity, Allena plans to begin Phase 3 trials in the 1Q18, with data expected in late 2020.
Backed by Atlas Venture, S.R. One and Google Ventures, Spero Therapeutics (SPRO) plans to raise $75 million. Its lead product candidate is designed to be the first broad-spectrum oral carbapenem-class antibiotic for use in adults to treat multi-drug resistant Gram-negative infections.
Sentinel Energy Services (STNLU) will continue the year's streak of blank check IPOs with a $300 million deal. The SPAC is led by the former CEOs of Schlumberger and Weatherford International.
Texas-based Energy Hunter Resources (EHR), a micro-cap E&P, also plans to price this week in a $43 million Reg A+ IPO. It is underwritten on a firm commitment basis by Stifel, B. Riley and FBR.
LiveXLive Media (LXL) is still attempting to price its IPO on a day-to-day basis.
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.
