Eight companies aim to raise a combined $3.5 billion in the short holiday week. Four Chinese IPOs lead the way, headlined by iQIYI (IQ), planning to raise over $2 billion in the largest Chinese offering since Alibaba in 2014. It is joined by another large Chinese online video IPO, Bilibili (BILI). The stream of Chinese deals comes just one week after the tariff scare and subsequent market selloff. Other deals include an outsourced customer service provider, a California commercial bank and two biotechs.
| U.S. IPO Calendar | |||
|---|---|---|---|
| Issuer Business |
Deal Size Market Cap |
Price Range Shares Filed |
Top Bookrunners |
| GreenTree Hospitality (GHG) Shanghai, China |
$330M $1,883M |
$16 - $18 19,400,000 |
Morgan Stanley BofA ML |
| Franchises over 2,000 economy and mid-scale hotels in China. | |||
| Bilibili (BILI) Shanghai, China |
$483M $3,203M |
$10.50 - $12.50 42,000,000 |
Morgan Stanley BofA ML |
| Provides an anime-themed video sharing and mobile gaming platform in China. | |||
| OneSmart Education (ONE) Shanghai, China |
$196M $2,003M |
$11 - $13 16,300,000 |
Morgan Stanley Deutsche Bank |
| Provides premium K-12 after-school education in China. | |||
| OP Bancorp (OPBK) Los Angeles, CA |
$21M $167M |
$9.50 - $11.50 2,000,000 |
KBW |
| California commercial bank primarily serving Korean-American communities. | |||
| Homology Medicines (FIXX) Bedford, MA |
$100M $529M |
$14 - $16 6,667,000 |
BofA ML Cowen |
| Preclinical biotech developing a gene therapy delivery platform for rare diseases. | |||
| IBEX Holdings (IBEX) Hamilton, Bermuda |
$60M $243M |
$14 - $16 4,000,000 |
Baird Piper Jaffray |
| Provides outsourced customer support and marketing services. | |||
| iQIYI (IQ) Beijing, China |
$2,250M $13,673M |
$17 - $19 125,000,000 |
Goldman (Asia) Credit Suisse |
| Chinese online video streaming platform owned by Baidu. | |||
| Unum Therapeutics (UNUM) Cambridge, MA |
$75M $413M |
$12 - $14 5,770,000 |
Morgan Stanley Cowen |
| Developing antibody-coupled T cell immunotherapies for cancers. | |||
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Backed by internet giant Baidu, video streaming platform iQIYI (IQ) is targeting $2.25 billion at a $13.7 billion valuation. iQIYI is a leader in the fast-growing Chinese online video market, which is expected to grow at 24% through 2022. However, key risks include rising content costs (its gross margin is 0%) and competition from major players Tencent Video and Alibaba’s Youku Tudou.
Bilibili (BILI), which provides an anime and comic-themed mobile gaming and video platform, aims to raise $483 million at a $3.2 billion valuation. Also a fast grower, Bilibili has seen revenue nearly quintuple from 2016 to 2017. The platform boasts heavily-engaged users, who spend an average of over 76 minutes per day watching broadcasts and playing games. However, two games accounted for roughly 70% of 2017 revenue and average MAUs declined sequentially in the MRQ.
A third Chinese deal, franchised hotel operator GreenTree Hospitality Group (GHG) is aiming to raise $330 million at a $1.9 billion market value. The company benefits from an asset-light model that leads to high margins (52% EBITDA margin in 2017) and has a 306-hotel development pipeline that should support continued growth. However, its hotels are geographically concentrated in the Shanghai region.
Premium K-12 Chinese educator OneSmart International Education (ONE) is targeting $196 million at a $2 billion market value. OneSmart has grown revenue at over 30% since the FY15 and generates strong free cash flow (59% in the MRQ). However, the Chinese for-profit education market is highly competitive, and peer trading recently turned negative.
IBEX Holdings (IBEX), which provides outsourced customer support services to Fortune 500 brands across a variety of industries, is targeting $60 million at a $243 million valuation. IBEX has grown revenue at a 21% CAGR since 2012 through a combination of geographic expansion and expansion within existing clients. However, revenue concentration is a key risk, with 58% of revenue coming from its top three clients in 2017.
Los Angeles, CA-based commercial bank OP Bancorp (OPBK) is targeting $21 million at a $167 million market value. With seven branches and total assets of over $900 million, OP Bancorp mainly serves small- and medium-sized Korean-American businesses and their owners. It operates at a net interest margin of 4.6% and an efficiency ratio of 58.7%.
Homology Medicines (FIXX) aims to raise $100 million at a $529 million valuation. The rare disease biotech is developing a proprietary delivery platform to deliver genetic medicines to patients suffering from rare genetic diseases. The company has collected promising preclinical data and plans to advance to a Phase 1/2 clinical trial, with data expected in 2019.
Unum Therapeutics (UNUM) is targeting $75 million at a $413 million market value. The cancer immunotherapy biotech is developing antibody-coupled T-cell therapies, and is currently in a Phase 1 trial for its lead candidate. It plans to begin a Phase 2 trial in 2018 for use in combination with Biogen's rituximab.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index has returned 1.3% year-to-date while the S&P 500 is down 3.2%. 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 3.4% year-to-date, while the ACWX is down 2.8%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Orsted (DONG Energy) and ASR Nederland.
