Following the IPO Index’s sharpest drop ever recorded, one cannabis SPAC is keeping the IPO market alive, expected to raise $150 million in the week ahead. Social Capital’s latest SPACs (IPOB.U, IPOC.U) are also eligible to price this week.
Led by former Canopy Growth executives, Collective Growth Corp (CGROU) plans to raise $150 million at a $190 million market cap. The acquisition vehicle intends to focus on ancillary cannabis businesses rather than those that handle the product directly. The cannabis industry has struggled recently; Sundial Growers (SNDL) became a penny stock this past week, off 94% from its July 2019 IPO, and Tilray (TLRY), which at one point was flying 800% above issue, is now down 76% from IPO.
Seven cannabis SPACs have IPO’d since 2018, one of which has completed its acquisition: Akerna (KERN; -49% from IPO). The other six trade below issue without warrants, and average a 0.1% return with warrants (GNRSU -2.0%; SRACU +0.5%; MCMJU -0.1%; SSPKU 0.0%; THCAU 0.0%; THCBU +2.0%).
| U.S. IPO Calendar | |||
|---|---|---|---|
| Issuer Business |
Deal Size Market Cap |
Price Range Shares Filed |
Top Bookrunners |
| Collective Growth Corp (CGROU) Austin, TX |
$150M $190M |
$10 15,000,000 |
Cantor Fitz. |
| Blank check company led by former Canopy Growth execs targeting the cannabis industry. | |||
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Volatility is at its highest level since the 2008 financial crisis, effectively shutting down the IPO market. Based on previous periods of high volatility, it will take at least one month after the market settles for IPO activity to resume. While it’s nearly impossible to price a non-SPAC IPO in this market, many companies have joined the pipeline since the sell-off began. These recent filers are some of the most likely candidates to break the ice when markets recover.
| 14 Recent IPO Filers Await Market Thaw | |||
|---|---|---|---|
| Issuer Business |
Deal Size |
Sector | Lead Underwriter |
| Brilliant Acquisition (BRLIU) | $40M | SPAC | EarlyBird |
| Blank check company targeting an Asia Pacific business. | |||
| Chardan Healthcare Acq 2 (CHAQ.U) | $85M | SPAC | Chardan |
| Second blank check company formed by Chardan Capital targeting the healthcare industry. | |||
| Accolade (ACCD) | $100M | Health Care | Goldman |
| Provides a platform that helps employees manage their healthcare benefits. | |||
| NLS Pharmaceutics (NLSP) | $40M | Health Care | Maxim |
| Biotech focusing on therapies for CNS and sleep disorders. | |||
| ORIC Pharmaceuticals (ORIC) | $86M | Health Care | JP Morgan |
| Phase 1 biotech developing small molecule therapies for cancer. | |||
| Procore Technologies (PCOR) | $400M | Technology | Goldman |
| Provides cloud-based construction management and collaboration software. | |||
| Pulmonx (LUNG) | $86M | Health Care | BofA |
| Makes minimally invasive medical devices for emphysema. | |||
| Social Hedosophia II (IPOB.U) | $300M | SPAC | Credit Suisse |
| Second blank check company formed by Social Capital and Hedosophia targeting US tech. | |||
| Social Hedosophia III (IPOC.U) | $600M | SPAC | Credit Suisse |
| Second blank check company formed by Social Capital and Hedosophia targeting ex-US tech. | |||
| ZoomInfo (ZI) | $500M | Technology | JP Morgan |
| Provides a data platform for sales, marketing, and recruiting professionals. | |||
| GigCapital3 (GIK.U) | $200M | SPAC | Nomura |
| Third blank check company led by semiconductor veteran Avi Katz. | |||
| Inari (NARI) | $100M | Health Care | BofA |
| Medical device company for venous diseases. | |||
| SelectQuote (SLQT) | $250M | Financials | Credit Suisse |
| Provides an online DTC insurance platform. | |||
| FreeCast (FRCT.RC) | $17M | Technology | Alexander Capital |
| Provides an integrated platform for video streaming services. | |||
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IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 3/12/20, the Renaissance IPO Index was down 22.3% year-to-date, while the S&P 500 was down 23.2%. 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 down 12.3% year-to-date, while the ACWX was down 27.6%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include SoftBank and Adyen.
