In another quiet week following the Thanksgiving holiday, just three companies came public. Micro-cap Chinese building materials supplier ReTo Eco-Solutions led the week with a 111% pop, followed by two blank-check companies, Leisure Acquisition and Regalwood Global Energy. In addition, seven companies filed terms this week, led by biotechs Denali Therapeutics and Odonate Therapeutics by deal size.
There were 26 IPOs in November, raising a combined $3.5 billion. Excluding three sub-$15 million IPOs, first day pops averaged 1% and averaged 11% in the aftermarket. Removing the four Chinese deals from the group would result in average aftermarket returns of 18%.
US tech IPOs were the best performers of the month, with companies like Stitch Fix (SFIX: +57% from IPO price), SendGrid (SEND: +32%), SailPoint Technologies (SAIL: +25%) and Aquantia (AQ: +29%) all generating returns over 25%. On the other hand, Chinese fintech/lending firms underperformed, led by Jianpu Technology (JT: -38%). There have been seven Chinese companies to come public in the 4Q, with aftermarket returns averaging -28% (range from -43% to +71%).
| 3 IPOs During the Week of November 27th, 2017 | |||||
| Issuer Business |
Deal Size ($mm) |
Market Cap at IPO ($mm) |
Price vs. midpoint |
First day return |
Return at 12/1 |
| ReTo Eco-Solutions (RETO) |
$14 | $112 | 0% | +111% | +71% |
| Chinese supplier of eco-friendly construction materials. |
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| Regalwood Global Energy (RWGE.U) |
$300 | $375 | 0% | 0% | 0% |
| Blank check company formed by Carlyle to acquire an energy business. |
|||||
| Leisure Acquisition (LACQU) |
$200 | $250 | 0% | -0.4% | -0.4% |
| Blank check company led by gaming and entertainment veteran Lorne Weil. |
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Micro-Cap Chinese IPO Pops
ReTo Eco-Solutions (RETO), a Chinese supplier of eco-friendly construction materials, quietly raised $14 million in its US IPO. At pricing, the company commanded a market value of $112 million. The stock popped 111% on its first day, although we note that volume was especially low at just 0.3 million shares, and ended the week up 71%.
Two SPACs Come to Market
Regalwood Global Energy (RWGE.U), an energy SPAC formed by Carlyle, raised $300 million in its IPO. Entertainment SPAC Leisure Acquisition (LACQU) raised $200 million in its IPO and traded down -0.4%. Executive Chairman Lorne Weil was previously behind the SPACs that acquired Inspired Entertainment (INSE) and Tecnoglass (TGLS).
There have been 31 blank check companies to come public this year, raising $8.6 billion in proceeds and generating an average total return of 1.0%.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is up 33.8% year-to-date, ahead of the S&P 500, which is up 18.3%. 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 30.1% year-to-date, while the ACWX is up 22.9%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Japan Post and Covestro.
