It was another busy week for the fall IPO market as 13 IPOs raised $4.6 billion led by restaurant payment processor Toast (TOST), which jumped 56% in its debut. Six SPACs also went public, and one IPO postponed: Canadian consumer products company Knowlton Development (KDC). The pipeline was fairly active, with seven IPOs and five SPACs submitting initial filings.
Toast (TOST) priced above the upwardly revised range to raise $870 million at a $22.9 billion market cap. Toast provides a suite of integrated payment and software solutions that are designed to streamline restaurant operations. The company grew ARR over 100% in the 1H21, though it has historically been unprofitable, and growth could slow as tailwinds from restaurants reopening abate. Toast finished up 39%.
Software firm Clearwater Analytics (CWAN) priced above the range to raise $540 million at a $4.4 billion market cap. Clearwater provides its 1,000+ clients with cloud-native software that allows them to simplify their investment accounting operations, and the company has a 100% recurring revenue model. A new investor and certain existing shareholders had indicated on $150 million of the IPO. Clearwater finished up 41%.
Customer engagement software provider EngageSmart (ESMT) priced above the range to raise $378 million at a $4.4 billion market cap. The company provides software that simplifies online workflows like paperless billing, electronic payment processing, scheduling, and client communication. While growth may slow post-pandemic, EngageSmart has a sticky customer based and a long track record of profitability. EngageSmart finished up 34%.
The largest deal of the week, Freshworks (FRSH) priced above the upwardly revised range to raise $1.0 billion at a $11.6 billion market cap. The company’s core product is its customer support software, and it also offers IT service management software and a nascent competitor to CRM solutions. While losses are expected to increase with S&M spending, Freshworks has delivered solid growth and 100%+ net dollar-based revenue retention as of 6/30/21. Freshworks finished up 30%.
Jewelry retailer Brilliant Earth Group (BRLT) downsized and priced below the range to raise $100 million at a $1.0 billion. Brilliant Earth is a digital-first jewelry company and a global leader in ethically sourced fine jewelry. The company has sold to consumers in all US states and over 50 countries, and has served over 370,000 customers through its e-commerce platform and 13 showrooms. Brilliant Earth finished up 27%.
COVID-19 test maker Cue Health (HLTH) priced at the midpoint to raise $200 million at a $2.4 billion market cap. Cue’s first commercially available diagnostic test for use with its Cue Health Monitoring System is its COVID-19 Test Kit, which has been authorized by two EUAs. Cue has five additional Test Kits in late-stage technical development, for which it expects to begin seeking FDA authorization or clearance in the 2H22. Cue Health finished up 25%.
Hiring solutions provider Sterling Check (STER) priced above the range to raise $329 million at a $2.3 billion market cap. Sterling is one of the leading US providers of background checks for corporate and government customers. The company serves more than 50% of the Fortune 100, often with exclusive contracts, though it operates in a highly competitive market. Sterling finished up 15%.
Food company Sovos Brands (SOVO) priced below the range to raise $280 million at a $1.2 billion market cap. Formed by Advent International, Sovos Brands offers a select group of acquired premium food brands. Profitable with solid growth, its largest brand of products, Rao's, included the #1 selling SKU in the pasta and pizza sauce category. Sovos finished up 14%.
London-listed crypto mining company Argo Blockchain (ARBK) raised $113 million at an $697 million market cap. Argo states that it is a leading blockchain technology company focused on large-scale mining of Bitcoin and other cryptocurrencies. Argo has a fleet of more than 21,000 purpose-built computers (mining machines) and can generate more than 1,075 petahash per second. Argo finished up 11%.
Canadian bank VersaBank (VBNK) raised $55 million at a $266 million market cap. VersaBank is a Canadian Schedule I chartered bank and states that it is one of the world's first fully digital financial institutions. As of July 31, 2021, VersaBank had $1.8 billion in assets, $1.6 billion in loans, $1.5 billion in deposits, and $202 million in stockholders' equity. VersaBank finished up 10%.
Global money transfer firm Remitly Global (RELY) priced above the range to raise $523 million at a $8.1 billion market cap. Remitly provides digital financial services for immigrants and their families in over 135 countries, and it has expanded its core cross-border remittance product to over 1,700 corridors worldwide. The company is unprofitable but has demonstrated growth and margin improvement. Remitly finished up 3%.
Online fashion platform a.k.a. Brands (AKA) downsized and priced below the downwardly revised range to raise $110 million at a $1.4 billion market cap. a.k.a. acquires digitally-focused fashion brands oriented toward millennial and Gen Z consumers, starting with its acquisition of Princess Polly in 2018. The company has a long runway to grow its brands in the US, but its M&A strategy carries execution risk. a.k.a. finished down 9%.
Personalized supplements seller Thorne Healthtech (THRN) downsized and priced at the low end of the downwardly revised range to raise $70 million at a $611 million market cap. The company’s vertically integrated brands, Thorne and Onegevity, provide actionable insights and personalized data, products, and services. While it has delivered strong growth, long-term differentiation in the space will rely on the unproven Onegevity. Thorne finished down 17%.
Six SPACs raised $1.2 billion led by Kingstown Capital’s Inflection Point Acquisition (IPAXU), which raised $300 million.
| 19 IPOs During the Week of September 20th, 2021 | |||||
|---|---|---|---|---|---|
| Issuer Business | Deal Size | Market Cap at IPO | Price vs. Midpoint | First Day Return | Return at 09/24 |
| Clearwater Analytics (CWAN) | $540M | $4,426M | 20% | +41% | +41% |
| Provides cloud-native software for investment accounting and analytics. | |||||
| Toast (TOST) | $870M | $22,858M | 27% | +56% | +39% |
| Provides mobile and digital payment processing and other services for restaurants. | |||||
| EngageSmart (ESMT) | $378M | $4,447M | 8% | +31% | +34% |
| Provides SaaS solutions for invoicing, payments, and health practice management. | |||||
| Freshworks (FRSH) | $1,026M | $11,576M | 20% | +32% | +30% |
| Provides a business SaaS for customer support and IT projects. | |||||
| Brilliant Earth Group (BRLT) | $100M | $1,035M | -20% | +43% | +27% |
| Digital-first retailer of ethically sourced fine jewelry. | |||||
| Cue Health (HLTH) | $200M | $2,429M | 0% | +25% | +25% |
| Develops and sells molecular home tests for COVID-19 and other diseases. | |||||
| Sterling Check (STER) | $329M | $2,341M | 10% | +17% | +15% |
| Provides tech-enabled background screening and identity verification services. | |||||
| Sovos Brands (SOVO) | $280M | $1,169M | -20% | +13% | +14% |
| Sells premium food brands including Rao's and noosa. | |||||
| Argo Blockchain (ARBK) | $113M | $697M | 0% | +12% | +11% |
| Blockchain technology company focused on large-scale crypto mining. | |||||
| VersaBank (VBNK) | $55M | $266M | 0% | +5% | +10% |
| Canadian digital bank. | |||||
| Remitly (RELY) | $523M | $8,056M | 8% | +13% | +3% |
| Provides a mobile payment service for international money transfers. | |||||
| HHG Capital (HHGCU) | $50M | $65M | 0% | +2% | +2% |
| Blank check company targeting established businesses with strong free cash flow. | |||||
| GigCapital5 (GIA.U) | $200M | $258M | 0% | +1% | +1% |
| Fifth blank check company led by semiconductor veteran Avi Katz. | |||||
| Argus Capital (ARGUU) | $265M | $331M | 0% | +1% | +1% |
| Blank check company led by former ViacomCBS/CBS executives targeting media, entertainment, and sports. | |||||
| Direct Selling Acq. (DSAQ.U) | $200M | $250M | 0% | +1% | +1% |
| Blank check company targeting domestically-based direct selling businesses. | |||||
| Live Oak Crestview Acq. (LOCC.U) | $200M | $250M | 0% | n/a | +0% |
| Blank check company formed by Live Oak Merchant Partners and Crestview. | |||||
| Inflection Point Acq. (IPAXU) | $300M | $375M | 0% | -2% | -1% |
| Blank check company formed by Kingstown Capital targeting consumer and tech. | |||||
| a.k.a. Brands (AKA) | $110M | $1,400M | -39% | -9% | -9% |
| Operates a portfolio of Millennial and Gen Z online fashion brands. | |||||
| Thorne Healthtech (THRN) | $70M | $611M | -29% | -25% | -17% |
| Offers a suite of personalized dietary supplements. | |||||
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Seven IPOs submitted initial filings. Pan-Asian life insurer FWD Group Holdings (FWD) filed for an estimated $2 billion IPO. Water pipeline operator Aris Water Solutions (ARIS), convenience store chain Yesway (YWSY), and orthopedic medical device company Paragon 28 (FNA) all filed to raise $100 million. Diagnostic test maker Lucid Diagnostics (LUCD) filed to raise $58 million, Chinese wheelchair maker Jin Medical International (JNMI.RC) filed to raise $33 million, and air purification device maker AeroClean Technologies (AERC) filed for a $28 million Reg A+ IPO.
Five SPACs submitted initial filings led by Enterprise 4.0 Technology Acquisition (ENTFU), which filed to raise $250 million.
| 12 Filings During the Week of September 20th, 2021 | |||
|---|---|---|---|
| Issuer Business | Deal Size | Sector | Lead Underwriter |
| Blockchain Moon Acq. (BMACU) | $100M | SPAC | Chardan |
| Blank check company targeting blockchain technology businesses in North America, Europe, and Asia. | |||
| Enterprise 4.0 Tech Acq. (ENTFU) | $250M | SPAC | Cantor Fitz. |
| Blank check company targeting "Enterprise 4.0" businesses. | |||
| Henley Park Acquisition (HPACU) | $175M | SPAC | Maxim |
| Blank check company led by a former Ford executive targeting the ACES sectors. | |||
| Jin Medical International (JNMI.RC) | $33M | Health Care | Prime Num. Cap. |
| Chinese wheelchair manufacturer. | |||
| Paragon 28 (FNA) | $100M | Health Care | BofA |
| Makes medical devices for the foot and ankle orthopedic market. | |||
| Vision Sensing Acq. (VSACU) | $88M | SPAC | EF Hutton |
| Blank check company targeting businesses developing vision sensing technologies. | |||
| Aris Water Solutions (ARIS) | $100M | Industrials | Goldman |
| Operates a water pipeline for the oil and gas fracking industry. | |||
| FWD Group (FWD) | $2,000M | Financials | Morgan Stanley |
| Pan-Asian life insurer founded by billionaire Richard Li. | |||
| Lucid Diagnostics (LUCD) | $58M | Health Care | Cantor Fitz. |
| Makes diagnostic tests for esophageal precancer and cancer. | |||
| Sanaby Health Acq. I (SANBU) | $150M | SPAC | BTIG |
| Blank check company targeting the healthcare sector. | |||
| AeroClean Technologies (AERC) | $28M | Consumer Discretionary | Benchmark |
| Makes air purification devices. | |||
| Yesway (YSWY) | $100M | Consumer Staples | Morgan Stanley |
| Operates a chain of convenience stores under the Yesway and Allsup's brands. | |||
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IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 9/23/2021, the Renaissance IPO Index was up 9.0% year-to-date, while the S&P 500 was up 18.4%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Moderna (MRNA) and Uber Technologies (UBER). The Renaissance International IPO Index was down 14.4% year-to-date, while the ACWX was up 9.0%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include SoftBank and Meituan-Dianping.
