Ten deals are expected to price next week, raising a combined $3.1 billion in proceeds, as this month gears up to be the busiest January in over eight years in terms of proceeds raised ($3.1 billion raised to date). The week will be headlined by the "Paypal of Brazil" PagSeguro Digital, expected to raise $1.8 billion in the largest IPO so far this year. Two LBOs are coming to market: Blackstone-backed Gates Industrial, targeting $751 million and Apollo-backed PlayAGS, targeting $174 million. Seven biotechs, including three micro-caps, are also set to price, looking to raise a total of $469 million.
| U.S. IPO Calendar | |||
|---|---|---|---|
| Issuer Business |
Deal Size Market Cap |
Price Range Shares Filed |
Top Bookrunners |
| Entera Bio (ENTX) Jerusalem, Israel |
$55M $141M |
$10 - $12 5,000,000 |
Oppenheimer |
| Developing oral formulations of treatments for a thyroid condition and osteoporosis. | |||
| PagSeguro (PAGS) São Paulo, Brazil |
$1,750M $5,842M |
$17.50 - $20.50 92,105,264 |
Goldman Morgan Stanley |
| Provides online and in-store payment services for small businesses in Brazil. | |||
| Eyenovia (EYEN) New York, NY |
$30M $125M |
$10 - $12 2,730,000 |
Ladenburg Roth Cap. |
| Developing micro-formulations of common eye therapies. | |||
| Gates Industrial (GTES) Denver, CO |
$751M $5,781M |
$18 - $21 38,500,000 |
Citi Morgan Stanley |
| Global manufacturer of power transmission belts and fluid power products. | |||
| Menlo Therapeutics (MNLO) Redwood City, CA |
$85M $335M |
$14 - $16 5,666,667 |
Jefferies Piper Jaffray |
| Developing treatments for moderate to severe skin itch and chronic cough. | |||
| Solid Biosciences (SLDB) Cambridge, MA |
$100M $551M |
$16 - $18 5,890,000 |
JP Morgan Goldman |
| Developing a gene therapy to treat Duchenne muscular dystrophy (DMD). | |||
| Adial Pharmaceuticals (ADIL) Charlottesville, VA |
$14M $57M |
$9 - $11 1,400,000 |
Joseph Gunnar |
| Developing a targeted therapy for alcohol use disorder based on an approved drug. | |||
| ARMO Biosciences (ARMO) Redwood City, CA |
$100M $450M |
$14 - $16 6,666,667 |
Jefferies Leerink Partners |
| Developing immunotherapies targeting various cancers and solid tumors. | |||
| PlayAGS (AGS) Las Vegas, NV |
$174M $586M |
$16 - $18 10,250,000 |
Credit Suisse Deutsche Bank |
| Apollo-backed supplier of electronic slot machines in Native American casinos. | |||
| resTORbio (TORC) Boston, MA |
$85M $410M |
$14 - $16 5,666,667 |
BofA ML Leerink Partners |
| Developing novel therapeutics for the treatment of aging-related diseases. | |||
The Big Deal: Brazil's Top Small Business Payment Processor Goes Public
Spun out of Brazilian Internet giant Universo Oline (UOL), PagSeguro Digital (PAGS) is looking to raise $1.8 billion, surpassing last week's $1.5 billion IPO from ADT (ADT), making it the largest deal of 2018. The payment solutions provider has grown its top line by 123% in the 9mo17 and has ample room for future growth in the large underserved micro-merchant and SME market ($558 billion total payment volume).
Blackstone and Apollo Bring Two LBOs
Blackstone-backed Gates Industrial (GTES) plans to raise $751 million in its IPO to pay down debt (4.1x net debt/adj. EBITDA post-IPO). The company sells products that are essential to the functioning of industrial equipment and have a high cost of failure, which supports its strong free cash flow generation. Although sales growth ex-FX stagnated from 2014 to 2016 as a result of weakness in its end markets, YTD growth has been strong as the company stands to benefit from a cyclical turn in industrial spending.
Electronic slot machine supplier PlayAGS (AGS) is expected to raise $174 million in its upcoming IPO as the company seeks to reduce leverage (4.3x LTM net debt/adj. EBITDA post-IPO). Acquired by Apollo in 2013 for a reported $240 million, PlayAGS has grown through acquisitions and is now getting a boost to organic revenue through a strong cabinet upgrade cycle (24% revenue increase in the 9mo17).
The Busiest Week for Biotech IPOs Since 2014
Dermatological biotech Menlo Therapeutics (MNLO) is expected to raise $85 million. Its lead candidate was licensed from Merck in 2012 and is currently in a 484-patient Phase 2 trial for itching associated eczema, with data expected in the 2Q18. The company is also enrolling patients in two Phase 2 trials for psoriasis and chronic cough, and is expected to begin two Phase 3 trials for prurigo nodularis in the 1H18. Insiders intend to purchase up to $40 million of the IPO (47% of deal size).
Solid Biosciences (SLDB), an early-stage biotech developing therapies for Duchenne muscular dystrophy (DMD), plans to raise $100 million. Solid's lead candidate is a gene transfer therapy that recently began enrolling patients in a Phase 1/2 trial, with preliminary data expected in the 1H19. Insiders intend to purchase $40 million of the IPO (40% of deal size).
Late-stage immuno-oncology company ARMO Biosciences (ARMO) is looking to raise $100 million to fund the development of its combination therapies for late-stage cancers. Its lead product candidate has been advanced into late-stage clinical development for the treatment of pancreatic ductal adenocarcinoma (PDAC) and non-small cell lung cancer (NSCLC). Insiders intend to purchase up to $40 million of the IPO (40% of deal size).
Backed by PureTech Health Ventures, resTORbio (TORC) is expected to raise $85 million. The company is developing a kinase inhibitor to treat respiratory tract infections in the elderly and its lead candidate is currently in a Phase 2b clinical trial, with top-line data expected in the 2H18. Insiders intend to purchase up to $35 million of the IPO (41% of deal size).
Micro-cap biotechs Entera Bio (ENTX), Eyenovia (EYEN) and Adial Pharmaceuticals (ADIL) are also expected to price in the upcoming week.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is up 2.1% year-to-date and the S&P 500 is up 5.1%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Snap (SNAP) and US Foods (USFD). The Renaissance International IPO Index is up 5.1% year-to-date, while the ACWX is up 5.5%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Orsted (DONG Energy) and ASR Nederland.
