Seven IPOs raised $1.1 billion, an active week given the market's volatility. Reflecting that backdrop, five of the seven five priced below the range, and two more postponed. Most had insider support. While the number of deals on the IPO calendar will make for an active October (>20 total), the decline in new filings over the past two weeks indicates a potential slowdown in November.
| 7 IPOs and 1 SPAC During the Week of October 15th, 2018 | |||||
|---|---|---|---|---|---|
| Issuer Business |
Deal Size |
Market Cap at IPO |
Price vs. Midpoint |
First Day Return |
Return at 10/19 |
| SI-BONE (SIBN) | $108M | $378M | 7% | +34% | +36% |
| Provides surgical joint implants for the alleviation of lower back pain. | |||||
| Studio City (MSC) | $359M | $928M | 9% | +24% | +33% |
| Macau-based entertainment resort and casino being spun out of Melco Resorts. | |||||
| Osmotica Pharmaceuticals (OSMT) | $47M | $361M | -53% | +16% | +29% |
| Develops and sells extended-release neurology drugs. | |||||
| LogicBio Therapeutics (LOGC) | $70M | $239M | -23% | +15% | +15% |
| Preclinical gene editing biotech developing therapies for rare diseases. | |||||
| SolarWinds (SWI) | $375M | $4,802M | -17% | +0% | +0% |
| Provides hybrid IT infrastructure management software. | |||||
| PhaseBio Pharmaceuticals (PHAS) | $46M | $123M | -62% | +0% | +0% |
| Phase 2 biotech developing therapies for rare cardiopulmonary diseases. | |||||
| Graf Industrial (GRAF.U) | $225M | $281M | 0% | +0% | +0% |
| Blank check company formed by SPAC veteran James Graf to acquire an industrial business worth over $1 billion. | |||||
| Niu Technologies (NIU) | $63M | $692M | -22% | -4% | -4% |
| China's largest producer of lithium-ion electric scooters. | |||||
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Even after cutting its deal size in half, IT management software provider SolarWinds (SWI) was the week's largest IPO, raising $375 million. The company traded flat on its debut. Taken private in 2016 by Silver Lake/Thoma Bravo, SolarWinds is not the typical software IPO, most of which have flown up this year. Instead, it has moderate growth, a large debt balance, and strong free cash flow generation.
The only surefire success this week was medical implant maker SI-BONE (SIBN), which priced at the high end and traded up. Despite its heavy losses, the company attracted investors as the leading player in a niche market.
Chinese deals continue to rely on insider support. Macau casino Studio City (MSC) priced at the high end to raise $359 million, before trading up 33%. However, we note that initial trading may be distorted by the low float, as insiders took down 89% of the deal. Another Chinese company, electric scooter maker Niu Technologies (NIU), priced its $63 million IPO below the range and fell 4%.
The three drug developers took the biggest price cuts this week. That worked out well for investors, with two trading up and one finishing flat. Preclinical gene editor LogicBio Therapeutics (LOGC) popped 15%, a good return but still below the original midpoint. Osmotica Pharmaceuticals (OSMT) and PhaseBio Pharmaceuticals (PHAS) cut their IPO price by more than 50%.
One SPAC raised $225 million. Led by James Graf and Michael Dee, Graf Industrial (GRAF.U) is targeting an industrial business valued at over $1 billion.
Two deals postponed. The second energy IPO to postpone in a row following Remora Royalties, Riley Exploration Permian (REPX) operates in an unproven basin, and trading from its closest peer indicates skepticism of the area. IT services provider Valtech (VTEC) was being pitched at a valuation discount to peers, but the sector has been in decline, and the company had no organic revenue growth in 2017.
