Tech again showed its strength, as online IT training unicorn Pluralsight (PS) finished the week with a 39% gain. More on that below. And more software unicorns are coming: Adaptive Insights (ADIN) filed this week, following Avalara (AVLR) last week. Both can come in early June. Two blank check companies also priced this week, raising a combined $500 million.
IPO trading improved this past week. The average 2018 IPO is trading 22% above its offer price, up from 18% last week. And 65% now trade above issue, up from 57%. For the second consecutive week, the VIX Volatility Index stayed below 15, a good sign for upcoming IPOs. Tech is in the lead - 2018 tech IPOs average a 40% gain - though Energy (+32%) and Healthcare (+20%) have been improving.
As many as 8 deals are on the IPO calendar for next week, ahead of the Memorial Day holiday. Payment-tech companies GreenSky (GSKY) and EVO Payments (EVOP) are the notable deals, joined by three biotechs.
| 3 IPOs During the Week of May 14th, 2018 | |||||
|---|---|---|---|---|---|
| Issuer Business |
Deal Size |
Market Cap at IPO |
Price vs. Midpoint |
First Day Return |
Return at 05/18 |
| Pluralsight (PS) | $311M | $2,106M | 36% | +33% | +39% |
| Provides online training courses in programming and software development. | |||||
| Trinity Merger (TMCXU) | $300M | $375M | 0% | +0% | +0% |
| Blank check company formed by Trinity Investments to acquire a real estate business. | |||||
| VectoIQ Acquisition (VTIQU) | $200M | $256M | 0% | +0% | +0% |
| Blank check company led by former GM execs and focused on the smart transportation industry. | |||||
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Pluralsight sees high demand
The latest tech unicorn to IPO, Pluralsight (PS) raised $311 million at a market cap of $2.1 billion. It priced $4 above its original midpoint at $15, and finished the week up 39%. Investors ignored heavy near-term losses, attracted to the company's high growth and unique position in the multi-billion dollar IT training market. At this level, investors are buying the hype or betting on a beat, which is not unreasonable given its recent acceleration in sales and superior billings growth.
Two SPACs Trade Flat (They Almost Always Do)
VectoIQ Acquisition (VTIQU) raised $200 million and traded up 0.1%. The blank check company changed the unit offering to include one full warrant instead of three-fourths. Backed by CEO Stephen Girsky, Cowen and BlackRock, the blank check company is focused on smart transportation businesses; Girsky previously helped lead General Motors' turnaround following its 2009 bankruptcy.
Trinity Merger (TMCXU) raised $300 million and traded up 0.3%. The SPAC also offered full warrants with its units. It is led by Sean Hehir and Kevin Hayashi, who have served as executives of sponsor Trinity Investments for about 20 years.
So far this year, 14 SPACs have raised a combined $2.9 billion. The average first-day return is 0.5%. Returns range from 0.1% to 3.1%, with an average of 1.5%.
US IPO Pipeline Update: Adaptive Insights and BJ's Wholesale file
| 8 Filings During the Week of May 14th, 2018 | |||
|---|---|---|---|
| Issuer Business |
Deal Size |
Sector | Lead Underwriter |
| Chara Solutions (CHRA) | $100M | Industrials | Morgan Stanley |
| Provides maintenance services to coal-fired and nuclear power plants. | |||
| GS Acquisition Holdings (GSAU.RC) | $600M | SPAC | Goldman |
| Blank check company formed by Goldman Sachs' asset management division. | |||
| LF Capital Acquisition (LFACU) | $135M | SPAC | B. Riley FBR |
| Blank check company targeting a business in the commercial banking or fintech industry. | |||
| Puxin (NEW) | $300M | Consumer Discretionary | Citi |
| Provides K-12 after-school tutoring services in China. | |||
| Adaptive Insights (ADIN) | $100M | Technology | Morgan Stanley |
| Provides cloud-based software for financial planning. | |||
| BJ's Wholesale Club (BJ) | $400M | Consumer Staples | BofA ML |
| Warehouse membership club operating over 215 stores across the East Coast. | |||
| SharedLabs (SHLB) | $27M | Technology | ThinkEquity |
| Provides outsourced IT services. | |||
| MeiraGTx (MGTX) | $86M | Health Care | BofA ML |
| Developing gene therapies for disorders of the eye and salivary gland. | |||
In addition to the new filings, three companies officially withdrew their IPOs: Biotech Abpro (ABP), packaging LBO Kloeckner Pentaplast (KP) and micro-cap REIT Gadsden Growth Properties (GADS).
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index has returned 2.8% year-to-date, while the S&P 500 is up 1.5%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Spotify (SPOT) and Snap (SNAP). The Renaissance International IPO Index is down -1.2% year-to-date, while the ACWX is up 0.4%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Orsted (DONG Energy) and Samsung BioLogics.
