The year's first "decacorn" is here: Dropbox (DBX) filed to raise $500 million on Friday. Investors got their first look at the cloud-storage provider's financials ahead of an IPO that could come as early as March 22.
None of the week's three expected IPOs completed their deals. Single-asset Aspen REIT (AJAX) and blank check company Crescent Funding (CFUNU) both officially postponed their IPOs. Another SPAC, Union Acquisition (LTN.U), is now scheduled to raise $100 million in the coming week.
Two SPACs and a Reg A+ are relatively insignificant to the broader IPO market. More importantly, new filing activity was relatively light at three companies and three SPACs. So despite the market's quick rebound in the prior week, many IPOs have been put on hold. The VIX Volatility Index settled to a three-week low, but still closed above its 2017 high. But if Dropbox and cybersecurity unicorn Zscaler (ZS) are well-received in March, that could open the floodgates.
To sum: We still expect the IPO market to open back up in early March, but at a slower pace than the record-breaking levels we saw in January. Biotechs should be the first to launch in the week ahead, an industry that boasts the year's three best-performing IPOs.
IPO Pipeline update: Dropbox, IBEX and 3 SPACs
Valued at $10 billion in 2014, Dropbox (DBX) plans to raise $500 million in what will be one of the largest tech IPOs in the past few years. Its impressive $1.1 billion in revenue (+31% YoY) is matched by an equally eye-popping accumulated deficit of $1.0 billion. While it is still highly unprofitable, it threw off $260 million in free cash flow in 2017. Outsourced customer support provider IBEX Holdings (IBEX) also filed to raise $75 million.
Some recent SPACs have come under pressure, but three more entered the pipeline this week: Terrapin 4 Acquisition (TRTLU), Opes Acquisition (OPESU) and Tiberius Acquisition (TIBRU). One of the largest and oldest IPOs in the pipeline, Albertsons Companies (ABS) announced that it would instead list by merging with publicly-traded Rite Aid.
| 6 Filings During the Week of February 19th, 2018 | |||
|---|---|---|---|
| Issuer Business |
Deal Size |
Sector | Lead Underwriter |
| Dropbox (DBX) | $500M | Technology | Goldman |
| Web-based cloud storage provider. | |||
| IBEX Holdings (IBEX) | $75M | Technology | Baird |
| Provides outsourced customer support services. | |||
| Sunlands Online Education (STG) | $300M | Consumer Discretionary | Goldman (Asia) |
| Chinese provider of online courses for professional qualifications. | |||
| Terrapin 4 Acquisition (TRTLU) | $300M | SPAC | Nomura |
| Blank check company formed by Terrapin Partners and led by Nathan Leight. | |||
| Opes Acquisition (OPESU) | $100M | SPAC | EarlyBird |
| Blank check company formed by Axis Capital Management to acquire a Mexican business. | |||
| Tiberius Acquisition (TIBRU) | $150M | SPAC | Cantor Fitz. |
| Blank check company formed to acquire a middle-market insurance business. | |||
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IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index has returned 2.2% year-to-date and the S&P 500 is up 2.8%. 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 4.5% year-to-date, while the ACWX is up 2.2%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Orsted (DONG Energy) and ASR Nederland. To find out if this is the best ETF for you, visit our IPO Investing page.
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