Seven IPOs and one SPAC entered public market this past week. Life sciences software maker Schrödinger (SDGR) rocketed in its debut and contract researcher PPD (PPD) completed 2020’s second billion-dollar deal, while mattress unicorn Casper (CSPR) disappointed. Record label giant Warner Music (WMGC.RC), a building products maker, and a biotech submitted initial filings.
Schrödinger (SDGR) priced above the range to raise $202 million at a $1.1 billion market cap and popped 68% on its first day. The company is unprofitable, but it has large and sticky customers and a broad drug pipeline with a mix of internal programs and collaborations. Schrödinger finished up 88%.
In the year’s biggest deal yet, PPD (PPD) joined the Billion-Dollar IPO Club by pricing at the high end to raise $1.6 billion at a $9.4 billion market cap. The company operates in a crowded space with large competitors, but has established itself as a global CRO of choice with clients including the top 50 biopharmas worldwide. PPD finished up 15%.
After slashing its valuation by 34%, Casper Sleep (CSPR) priced at the low end to raise $100 million at a $487 million market cap, less than half of its last private valuation. Despite leading the highly competitive DTC mattress market, investor taste has continued to shift away from money-losing unicorns. It opened 21% above its IPO price, but finished the week down 8%.
Preclinical gene editing biotech Beam Therapeutics (BEAM) upsized its offering by 69% and priced at the high end to raise $180 million at a $906 million market cap, making it one of the largest preclinical biotech IPOs ever. Despite its early stage and unproven approach, Beam finished up 21%, continuing a hot streak for biotechs.
Recreational boat roll-up OneWater Marine (ONEW) priced at the bottom of the lowered range to raise $55 million at a $166 million market cap. The company originally planned to raise $60 million at a $181 million market cap but postponed in October 2019. Bolstered by strong performances from its peers, OneWater finished up 26%.
Mortgage REIT NexPoint Real Estate Finance (NREF) priced at the low end to raise $95 million at a $335 million market cap, and finished down 1%. Florida bank Professional Holding Corp (PFHD) priced slightly below the range to raise $57 million at a $232 million market cap, and finished up 6%.
| 8 IPOs During the Week of February 3rd, 2020 | |||||
|---|---|---|---|---|---|
| Issuer Business |
Deal Size |
Market Cap at IPO |
Price vs. Midpoint |
First Day Return |
Return at 02/07 |
| Schrödinger (SDGR) | $202M | $1,111M | 13% | +68% | +88% |
| Provides a software platform for life sciences and materials research. | |||||
| OneWater Marine (ONEW) | $55M | $166M | -37% | +26% | +26% |
| Recreational boat dealership that owns and operates 63 stores in the US. | |||||
| Beam Therapeutics (BEAM) | $180M | $906M | 6% | +10% | +21% |
| Preclinical biotech developing therapies based on single-base gene editing. | |||||
| PPD (PPD) | $1,620M | $9,423M | 6% | +11% | +15% |
| LBO'd contract research organization that provides drug development services. | |||||
| Professional Holding Corp (PFHD) | $57M | $232M | -8% | +6% | +6% |
| Florida bank with nine locations across the Miami-Dade MSA. | |||||
| InterPrivate Acquisition (IPV.U) | $210M | $261M | 0% | +1% | +1% |
| Blank check company backed by merchant bank InterPrivate and led by its founder Ahmed Fattouh. | |||||
| NexPoint R.E. Finance (NREF) | $95M | $335M | -5% | -1% | -1% |
| Newly formed mortgage REIT focused on single-family rental and multifamily loans. | |||||
| Casper (CSPR) | $100M | $487M | -33% | +13% | -8% |
| Direct-to-consumer mattress and bedding brand. | |||||
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Three companies filed for IPOs this past week. Taken private by Access Industries in 2011 for $3.3 billion, Warner Music Group (WMGC.RC) filed to return to the public markets with an IPO we estimate could raise $750 million. Building products maker The AZEK Company (AZEK) filed for an estimated $500 million IPO, and preclinical rare disease biotech Passage Bio (PASG) filed to raise $125 million.
| 3 Filings During the Week of February 3rd, 2020 | |||
|---|---|---|---|
| Issuer Business |
Deal Size |
Sector | Lead Underwriter |
| AZEK (AZEK) | $500M | Industrials | Barclays |
| Manufactures composite residential and commercial building products. | |||
| Warner Music (WMGC.RC) | $750M | Communication Services | Morgan Stanley |
| Leading music publisher and record label. | |||
| Passage Bio (PASG) | $125M | Health Care | JP Morgan |
| Preclinical biotech developing gene therapies for rare CNS disorders. | |||
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In other IPO news, workplace app Asana reportedly submitted a confidential filing with the SEC for a direct listing rather than a traditional IPO. Asana would join the ranks of other non-traditional tech unicorns Slack (WORK) and Spotify (SPOT), both of which have experienced rocky trading.
For our take on the rising presence of direct listings, read our series: “The Hijacking of the IPO Market.”
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 2/6/20, the Renaissance IPO Index was up 8.4% year-to-date, while the S&P 500 had a gain of 3.6%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Uber (UBER) and Spotify (SPOT). The Renaissance International IPO Index was up 4.4% year-to-date, while the ACWX was down 0.2%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Adyen and SoftBank.
