After the busiest week of the year in the prior week, May 2019 continued to be active this past week with five IPOs and one SPAC offering. Three came to market with valuations of more than $1 billion, including fast-growing unicorns Luckin Coffee and Fastly, and Avantor, the largest IPO of an LBO'd company since 2011.
Avantor (AVTR), an LBO'd manufacturer and distributor of laboratory supplies, raised $2.9 billion at a market cap of $8.4 billion. The company offered 207 million shares at $14 per share, offering an additional 53 million shares at a price 26% below the midpoint of its original range of $18 to $20. Avantor also raised $900 million from a concurrent offering of 18 million mandatory convertible preferred shares. Owned by New Mountain Capital, the highly-leveraged LBO rose 4% on Friday.
Luckin Coffee (LK), a Chinese coffee retailer, came to market with a $4.2 billion valuation, raising $561 million by offering 33 million shares at $17, three million more shares than originally planned and at the high end of the range of $15 to $17. Luckin opened with a 47% gain, before finishing Friday 20% above its offer price. Currently China's #2 coffee chain, Luckin plans to surpass Starbucks' store count by the end of 2019, an impressive feat given that the company has been in operation for less than two years. That said, its massive growth from less than $1 million in revenue in 2017 to over $122 million in 2018 has come at a high cost, spending massive amounts on capex to rapidly expand its store base.
Fastly (FSLY), which operates an edge cloud platform for optimized web and application delivery, came to market with a $1.6 billion valuation, raising $180 million by offering 11.3 million shares at $16, the high end of the range of $14 to $16. The company was the best performer of the week, popping 50% on its first day of trading. With applications becoming more dependent on quick data transmission, the edge computing market is expected to nearly double over the next four years.
Applied Therapeutics (APLT), a Phase 2 biotech developing therapies for diabetic complications, raised $40 million by offering 4 million shares at $10 dollars, well below the range of $14 to $16. The company traded down 6% on its first day before ending the week just above its IPO price.
Postal Realty Trust (PSTL), a recently-formed REIT that leases properties to the USPS, raised $77 million by offering 4.5 million shares at $17 dollars, 500,000 shares fewer than originally planned and below the original range of $19 to $21. The company's share price barely moved, only losing 1% as of the end of the week.
One SPAC, AGBA Acquisition (AGBAU) also came public this week.
In addition, two companies postponed their public offerings this week. PIMCO Mortgage Income Trust (PMTG), a newly-formed residential mortgage REIT managed by PIMCO, was planning to raise $1 billion, but backed away citing unfavorable equity market conditions. A lack of investor enthusiasm for a new residential mortgage REIT could also be at play. ConversionPoint Holdings (CPTI), which provides an AI-integrated SaaS platform for marketing and e-commerce services also postponed its IPO.
| 6 IPOs During the Week of May 13th, 2019 | |||||
|---|---|---|---|---|---|
| Issuer Business |
Deal Size |
Market Cap at IPO |
Price vs. Midpoint |
First Day Return |
Return at 05/17 |
| Fastly (FSLY) | $180M | $1,619M | 7% | +50% | +50% |
| Operates an edge cloud platform for optimized web and application delivery. | |||||
| Luckin Coffee (LK) | $561M | $4,172M | 6% | +20% | +20% |
| Chinese coffee retailer offering pick-up and delivery via a mobile app. | |||||
| Avantor (AVTR) | $2,898M | $8,360M | -28% | +4% | +4% |
| LBO'd distributor and manufacturer of laboratory supplies and services. | |||||
| AGBA Acquisition (AGBAU) | $40M | $52M | 0% | n/a | +0% |
| Blank check company targeting the services sector in China. | |||||
| Applied Therapeutics (APLT) | $40M | $191M | -33% | -6% | +0% |
| Phase 2 biotech developing therapies for diabetic complications. | |||||
| Postal Realty Trust (PSTL) | $77M | $114M | -15% | +0% | -1% |
| Recently-formed REIT that manages and leases properties to the USPS. | |||||
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Five companies also joined the pipeline with initial filings, including CrowdStrike (CRWD), a cybersecurity provider that we estimate could raise $400 million, discount grocery chain Grocery Outlet Holdings (GO), which we estimate could raise up to $300 million, and Fiverr International (FVRR), an online market place for hiring freelancers.
| 5 Filings During the Week of May 13th, 2019 | |||
|---|---|---|---|
| Issuer Business |
Deal Size |
Sector | Lead Underwriter |
| G Medical Innovations (GMVD) | $15M | Health Care | HC Wainwright |
| Provides medical devices for monitoring various health conditions. | |||
| Safe Auto Insurance (SAIG) | $50M | Financials | BofA ML |
| Direct-to-consumer auto insurance provider. | |||
| Fiverr International (FVRR) | $100M | Technology | JP Morgan |
| Online marketplace to hire and manage remote freelancers. | |||
| CrowdStrike (CRWD) | $400M | Technology | Goldman |
| Provides cloud-native endpoint security software for large enterprises. | |||
| Grocery Outlet Holdings (GO) | $300M | Consumer Staples | BofA ML |
| Operates a network of more than 300 independently-run discount grocery stores. | |||
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IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 5/16/19, the Renaissance IPO Index was up 34.7% year-to-date, while the S&P 500 had a gain of 15.6%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Elanco (ELAN) and Okta (OKTA). The Renaissance International IPO Index was up 10.2% year-to-date, while the ACWX was up 9.8%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include SoftBank and Xiaomi.
