With investors opting for turkey over deals, Thanksgiving week was slow for the IPO market. Senior housing SPAC Big Rock Partners Acquisition (BRPAU) was the only company to come public, raising $60 million.
Despite the quiet week, the IPO market as a whole remains strong; average return from IPO this year is 21%, with 8% coming in the aftermarket. The Renaissance IPO ETF (IPO) is at an all-time high and is up 39% YTD.
Chinese Lenders Get Hit
Several US-listed Chinese online finance and lending companies saw their stock prices decline when regulators in China announced a crackdown on microlenders. The move, which orders local governments to cease approving licenses for companies that make online microloans, signals that more regulatory action could be coming soon. Qudian (QD), which priced above the range when it came public last month, had experienced volatile early trading amid criticism of its business practices; following the regulatory update, the stock now sits nearly 50% below its IPO price. On Friday, the company announced that all transactions on the Alipay consumer interface would be limited to a 24% annualized rate; the reduction could cut Qudian's earnings substantially, as the company relies heavily on Alipay for volume generation. PPDAI Group (PPDF), which IPO'd in early November, when sentiment had begun to turn negative in the sector, priced at the low end of the range; it has since declined 27%. Jianpu Technology (JT) has declined 39% after pricing at the low end of the range last week. 2015 IPO Jupai Holdings (JP) saw its stock price fall 11% over the past week.
November Recap
November has been characterized by low first day returns and uninspiring aftermarket trading for IPOs. First day pops in November average just 1% and aftermarket return is 5%. This compares to the 13% first day average return and 8% aftermarket return prior to this month. The month’s worst performer is pop culture toy maker Funko (FNKO), which fell 41% on its first day; the worst first day for an IPO in 17 years.
However, not all November IPOs have followed Funko’s lead. Cloud-based email marketing platform SendGrid (SEND) priced an upsized IPO above its range, and has increased 26% from its IPO price. Another solid performer, access management software provider SailPoint Technologies (SAIL) has advanced 32% after pricing above the range.
IPO Pipeline Update
Industrial Logistics Property Trust (ILPT), an industrial and logistics REIT spun out of 2012 IPO Select Income REIT (SIR) and managed by RMR Group, filed to raise $100 million. Heading into the end of the year, there are currently 43 companies in our active pipeline.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is up 38.8% year-to-date, ahead of the S&P 500, which is up 16.2%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Square (SQ) and Ferrari (RACE). The Renaissance International IPO Index is up 27.0% year-to-date, while the ACWX is up 23.8%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Japan Post and Covestro.
