US IPO Week Ahead: Chinese fintech, pool supplies, and auto insurance lead a diverse 15 IPO week

Updated Monday, 10/26.

In a pre-election tidal wave of deals, 15 IPOs are scheduled to raise $5.1 billion in the week ahead. Chinese loan facilitation platform Lufax (LU) is leading the diverse group, which includes a pool supplies retailer, an mobile auto insurer, and two mortgage lenders, among others.

The largest deal of the week, Lufax (LU) plans to raise $2.2 billion at a $30.5 billion market cap. The company provides a leading personal financial services platform, primarily meeting the unmet demand for personal lending among small business owners and salaried workers. Lufax has demonstrated solid growth and cash flow generation, though its margins contracted in the 1H20.

Pool supplies retailer Leslie's (LESL) plans to raise $600 million at a $2.8 billion market cap. Backed by L Catterton and GIC, the company is the largest direct-to-consumer brand in the nearly $11 billion US pool and spa care industry with over 930 retail locations across the US. Leslie's saw revenue growth accelerate in the 9mo FY20 as COVID-19 stimulated consumer demand across the pool and spa industry.

Mobile-based auto insurer Root (ROOT) plans to raise $568 million at a $6.1 billion market cap. Root currently operates in the US auto insurance market with plans to expand into other markets in the future. The company is growing fast (+570% y/y), but it is highly unprofitable, with a -16% gross margin in the LTM.

The larger of the week's two residential mortgage lenders, Caliber Home Loans (HOMS) plans to raise $345 million at a $1.8 billion market cap. Caliber focuses directly on the purchase market and is the second largest independent mortgage originator based on purchase volume since 2016. While revenue declined in the FY19, revenue more than doubled in the 1H20, and the company turned profitable.

Sanken spin-off Allegro Microsystems (ALGM) plans to raise $325 at a $2.5 billion market cap. Allegro is a leading global designer, developer, fabless manufacturer, and marketer of sensor integrated circuits (ICs) and application-specific analog power ICs for the automotive and industrial markets. Gross margin and cash flows increased in the first half of the year, though revenue declined in both 2019 and the 1H20.

Taken private by Mitel in 2015 and now owned by Siris Capital, Mavenir (MVNR) plans to raise $300 million at a $1.8 billion market cap. The company provides a suite of cloud-native software applications for network functionality of wireless service providers, and it is poised to benefit from the adoption of 5G and OpenRAN. The company’s sales cycle is long, and its revenue is highly concentrated.

Atea Pharmaceuticals (AVIR) plans to raise $253 million at a $2.0 billion market cap. Atea is a clinical-stage biopharmaceutical company focused on developing antiviral therapeutics to improve the lives of patients suffering from life-threatening viral infections, specifically COVID-19. The company's lead candidate, AT-527, is currently in a Phase 2 trial in approximately 190 adult COVID-19 patients, with topline data expected in the 1H21.

Residential mortgage lender AmeriHome (AHM) plans to raise $250 million at a $1.3 billion market cap. AmeriHome’s flexible and scalable platform has allowed the company to produce strong growth and performance, with 21 consecutive quarters of profitability and production volume growth of 187% from 2015 to the LTM 2Q20.

MediaAlpha (MAX) plans to raise $176 million at a $1.2 billion market cap. With strong growth and solid free cash flow generation, the founder-led company provides an automated digital ad buying platform for the insurance industry, a $4 billion market opportunity. Insiders are selling on the IPO, after receiving a $106 million debt-funded distribution last month.

Precious metals producer Gatos Silver (GATO) plans to raise $150 million at a $433 million market cap. This pre-revenue company is focused on the production, development, and exploration of silver and precious metals. The company is currently concentrated on the production and continued development of the Cerro Los Gatos Mine, which led to widening losses in the 1H20.

Fibrosis biotech Galecto (GLTO) plans to raise $85 million at a $395 million market cap. The company’s lead candidate is an inhaled inhibitor of galectin-3 for the treatment of severe fibrotic lung diseases, including idiopathic pulmonary fibrosis (IPF). The company has conducted a Phase 2a trial in 24 IPF patients and has initiated a Phase 2b trial in 450 IPF patients, with topline results expected in 2022.

Diagnostics provider Biodesix (BDSX) plans to raise $75 million at a $521 million market cap. The company provides data-driven diagnostic solutions to discover, develop, and commercialize solutions for clinical unmet needs, with a primary focus in lung disease. The company’s operations have been impacted by COVID-19, with revenue and gross margin falling in the 1H20.

Clinical-stage biotech SQZ Biotechnologies (SQZ) plans to raise $75 million at a $450 million market cap. SQZ is developing transformative cell therapies for patients with cancer, infectious diseases and other serious conditions. Its most advanced candidate, SQZ Antigen Presenting Cells (SQZ APC), is currently in a Phase 1 trial in HPV+ tumors, with initial data expected in the 2H21.

G Medical Innovations (GMVD), which provides app-connected medical devices for monitoring vital signs, plans to raise $30 million at a $362 million market cap. The Israel-based company generated just $2 million in revenue in the 1H20 and is highly unprofitable, with a -26% gross margin.

 Neurological disorder biotech Inhibikase Therapeutics (IKT) plans to raise $25 million at a $152 million market cap. Its lead candidate is a c-Abl protein kinase inhibitor being developed for Parkinson’s disease (PD). The company has filed two INDs and expects to begin the first dosing PD patients following the IPO.

While not included in Renaissance Capital’s stats, medical test developer GBS (GBS) plans to raise $20 million at a $167 market cap by offering units with warrants attached. The company is currently developing saliva-based tests for SARS-CoV-2 and diabetes management.

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Street research is expected for 14 companies in the week ahead. On Monday, 10/26: Orphazyme (ORPH), Boqii Holding (BQ), Chindata Group (CD), Yalla Group (YALA), Asana (ASAN), Lixiang Education Holding (LXEH), Mission Produce (AVO), Palantir (PLTR), and Pulmonx (LUNG). On Tuesday, 10/27: Academy Sports (ASO), C4 Therapeutics (CCCC), Immunome (IMNM), Oncorus (ONCR), and Thryv Holdings (THRY).

The lock-up period for Lyra Therapeutics (LYRA) will be expiring on Wednesday, 10/28.

IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 10/22/20, the Renaissance IPO Index was up 76.7% year-to-date, while the S&P 500 was up 6.9%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Zoom Video (ZM) and Uber (UBER). The Renaissance International IPO Index was up 36.6% year-to-date, while the ACWX was down 3.1%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Meituan-Dianping and SoftBank Corp.