This past week the 2018 IPO market came to a close, as three IPOs and three SPACs raised a combined $1.6 billion. The three IPOs all had weak trading.
Tencent Music Entertainment (TME) was the week's big deal, raising $1.1 billion, the year's fourth billion-dollar US IPO from a Chinese company. Spun out of Tencent, the music streaming provider has top market share in China, strong growth, and high profitability. While the sustainability of its growth is a concern, the obvious concern for new investors is that both Chinese stocks and streaming stocks have been selling off heavily. Tencent Music priced at the bottom of the range and traded up 8% initially, but finished the week with a -1% loss.
Chinese fintech 360 Finance (QFIN) also priced at the low end to raise $51 million at a $2.6 billion diluted valuation. It finished Friday right at its $16.50 offer price. Like several recent Chinese fintechs to list in the US, insiders and third-parties had indicated on purchasing most of the deal at the time of its launch. The company had high growth, but was also unprofitable.
Legacy Housing (LEGH) priced an upsized offering slightly above the midpoint to raise $48 million at a market cap of $288 million. The provider of manufactured houses was the week's winner with a 0.3% gain. Legacy Housing has solid margins and decent growth, though it is a regional player concentrated in Texas, and peers have recently underperformed.
This week, we released our 2018 Law Firm Leaderboard. Next week, watch out for our 2018 IPO Annual Review.
| 3 IPOs and 3 SPACs During the Week of December 10th, 2018 | |||||
|---|---|---|---|---|---|
| Issuer Business |
Deal Size |
Market Cap at IPO |
Price vs. Midpoint |
First Day Return |
Return at 12/14 |
| 360 Finance (QFIN) | $51M | $2,581M | -6% | +0% | +0% |
| Chinese online consumer lending platform partnered with 360 Group (Qihoo). | |||||
| Legacy Housing (LEGH) | $48M | $288M | 2% | +0% | +0% |
| Builds, sells, and finances manufactured homes. | |||||
| Chardan Healthcare Acq. (CHACU) | $70M | $88M | 0% | +0% | +0% |
| Blank check company formed by Chardan to acquire a healthcare business. | |||||
| CF Finance Acquisition (CFFAU) | $250M | $319M | 0% | +0% | +0% |
| Blank check company formed by the CEO of Cantor Fitzgerald. | |||||
| Schultze Acquisition (SAMAU) | $130M | $168M | 0% | -1% | +0% |
| Blank check company formed by distressed debt investor George Schultze. | |||||
| Tencent Music (TME) | $1,066M | $21,828M | -7% | +8% | -1% |
| Leading Chinese provider of music streaming, live streaming and online karaoke. | |||||
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