Five IPOs and one SPAC are scheduled to raise $2.7 billion in the week ahead, led by Brazilian brokerage XP (XP). After being virtually absent in the 4Q19, two US tech companies are expected to IPO, including one with a billion-dollar-plus proposed valuation.
In the largest deal of the quarter, XP (XP) plans to raise $1.7 billion at a $13 billion market cap. The company has a track record of strong growth and has become a sizable force in Brazil’s financial industry. XP is backed by Itaú Unibanco, Brazil’s largest bank, and had over 1.5 million active retail clients as of 9/30/19.
Last valued privately at $7.5 billion, Chinese software platform OneConnect Financial Technology (OCFT) plans to raise $468 million at a $4.9 billion market cap in one of the largest IPO down rounds of all time. Backed by SoftBank, the company has demonstrated growth by offering AI-powered software and blockchain services, but it is highly unprofitable (-55% LTM EBITDA margin) and is coming public at a challenging time for Chinese issuers.
Bill.com (BILL) plans to raise $150 million at a $1.3 billion market cap. A rare tech unicorn, Bill.com has steady growth and is near profitability (-5% LTM EBITDA margin). It boasts a large and growing customer base, but relies heavily on its accounting firm partners (45% of sales).
Social media management software Sprout Social (SPT) plans to raise $150 million at an $894 million market cap. The company grew annualized recurring revenue by 27% y/y in the 9mo19, but it faces significant competition.
Chinese commercial drone developer EHang Holdings (EH) plans to raise $43 million at a $742 million market cap. The first mover in developing autonomous air taxis, EHang is early stage and all of its sales to date have been for testing programs.
Lock-up periods will be expiring for four companies in the week ahead. On Monday, December 9: CrowdStrike (CRWD). On Tuesday, December 10: Fiverr International (FVRR) and Mohawk Group (MWK). On Wednesday, December 11: Chewy (CHWY).
On Monday, December 9, Street research is expected for 89Bio (ETNB) and YayYo (YAYO).
We plan to release the final installment of our “Hijacking the IPO Market” series this week.
| U.S. IPO Calendar | |||
|---|---|---|---|
| Issuer Business |
Deal Size Market Cap |
Price Range Shares Filed |
Top Bookrunners |
| XP (XP) São Paulo, Brazil |
$1,704M $12,967M |
$22 - $25 72,510,640 |
Goldman JP Morgan |
| Fast-growing digital brokerage and wealth manager in Brazil. | |||
| Bill.com (BILL) Palo Alto, CA |
$150M $1,297M |
$16 - $18 8,823,529 |
Goldman BofA |
| Provides a SaaS platform that automates billing and back-office processes for SMBs. | |||
| EHang (EH) Guangzhou, China |
$43M $742M |
$12.50 - $14.50 3,200,000 |
Morgan Stanley |
| Chinese commercial drone developer. | |||
| Healthcare Merger Corp. (HCCOU) New York, NY |
$200M $256M |
$10 20,000,000 |
Cantor Fitz. |
| Blank check company targeting the healthcare industry. | |||
| OneConnect (OCFT) Shenzhen, China |
$468M $4,887M |
$12 - $14 36,000,000 |
Morgan Stanley Goldman (Asia) |
| Ping An-backed provider of operations management tools for financial firms. | |||
| Sprout Social (SPT) Chicago, IL |
$150M $894M |
$16 - $18 8,823,530 |
Goldman Morgan Stanley |
| Provides a cloud-based platform for businesses to manage social media accounts. | |||
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Bill.com (BILL), which provides a SaaS platform that automates billing and back-office processes for SMBs, plans to raise $150 million by offering 8.8 million shares at a price range of $16.00 to $18.00. At the midpoint of the proposed range, Bill.com would command a market value of $1.3 billion. Bill.com, which was founded in 2006, booked $121 million in revenue over the last 12 months. The Palo Alto, CA-based company plans to list on the NYSE under the symbol BILL. Goldman Sachs, BofA Securities, Jefferies, and KeyBanc Capital Markets are the joint bookrunners on the deal. Dragoneer Investment Group intends to purchase up to 1.5 million shares on the offering (17% of the deal).
EHang Holdings (EH), a Chinese commercial drone developer, plans to raise $43 million by offering 3.2 million ADSs at a price range of $12.50 to $14.50. At the midpoint of the proposed range, EHang would command a market value of $742 million. EHang, which was founded in 2014, booked $11 million in revenue over the last 12 months. The Guangzhou, China-based company plans to list on the Nasdaq under the symbol EH. Morgan Stanley is the lead bookrunner on the deal. Insiders intend to purchase up to $7 million of the IPO (16% of the deal).
Healthcare Merger Corp. (HCCOU), a blank check company targeting the healthcare industry, plans to raise $200 million by offering 20.0 million units at where it would command a market value of $256 million. Each unit consists of one share of common stock and one-half of one warrant to purchase common stock at a price of $11.50 per share. Healthcare Merger Corp. was founded in 2019. The New York, NY-based company plans to list on the Nasdaq under the symbol HCCOU. Cantor Fitzgerald is the lead bookrunner on the deal.
OneConnect Financial Technology (OCFT), a Ping An-backed provider of operations management tools for financial firms, plans to raise $468 million by offering 36.0 million ADSs at a price range of $12.00 to $14.00. At the midpoint of the proposed range, OneConnect Financial Technology would command a market value of $4.9 billion. OneConnect Financial Technology, which was founded in 2015, booked $2.1 billion in revenue over the last 12 months. The Shenzhen, China-based company plans to list on the NYSE under the symbol OCFT. Morgan Stanley, Goldman Sachs (Asia), J.P. Morgan, and three others are the joint bookrunners on the deal.
Sprout Social (SPT), which provides a cloud-based platform for businesses to manage social media accounts, plans to raise $150 million by offering 8.8 million shares at a price range of $16.00 to $18.00. At the midpoint of the proposed range, Sprout Social would command a market value of $894 million. Sprout Social, which was founded in 2010, booked $97 million in revenue over the last 12 months. The Chicago, IL-based company plans to list on the Nasdaq under the symbol SPT. Goldman Sachs, Morgan Stanley, KeyBanc Capital Markets, and William Blair are the joint bookrunners on the deal.
XP (XP), a fast-growing brokerage and wealth manager in Brazil, plans to raise $1.7 billion by offering 72.5 million shares at a price range of $22.00 to $25.00. At the midpoint of the proposed range, XP would command a market value of $13.0 billion. XP, which was founded in 2001, booked $4.3 billion in revenue over the last 12 months. The São Paulo, Brazil-based company plans to list on the Nasdaq under the symbol XP. Goldman Sachs, J.P. Morgan, Morgan Stanley, and six others are the joint bookrunners on the deal. Durable Capital Partners intends to purchase up to $170 million of the IPO (10% of the deal).
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 12/5/19, the Renaissance IPO Index was up 31.5% year-to-date, while the S&P 500 had a gain of 24.4%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Spotify (SPOT) and Roku (ROKU). The Renaissance International IPO Index was up 20.6% year-to-date, while the ACWX was up 16.3%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Meituan-Dianping and SoftBank.
