The IPO market was poised to raise $1.4 billion from four IPOs this past
week, but instead two biotechs raised $145 million. A substantial
portion of those proceeds came from insiders, and both biotechs broke
issue with an average loss of 17%.
With markets off and volatility up; it is more difficult for issuers and IPO buyers to find agreeable price. So far, no operating companies have gone public in 2016. All four biotech IPOs this year have leaned on insiders to get done, and each trades below its offer price.
Final nough to end the biotech boom?
Underwritten by Goldman, early-stage gene therapy biotech AveXis (AVXS) raised $95 million - 12% more than anticipated - and closed its first day down 10%. At least 20% of proceeds were from existing investors, which included Deerfield, PBM Capital and Venrock. Gene therapy peers REGENXBIO (RGNX) and Dimension Therapeutics (DMTX) have lost 40% and 54%, respectively, from their 2H15 IPOs. Cystic fibrosis biotech Proteostasis Therapeutics (PTI) slashed its offer price and increased shares to raise $50 million - at least 40% from insiders - and proceeded to decline 17% on its first day. It finished Friday at $6.18, a 23% loss. Of note, the biotech's top two peers (Nivalis and ProQR Therapeutics) are worth less than the cash on their balance sheets.
Airport food doesn't take off; waste services thrown in the trash heap
Putting iPads in airports, concession operator OTG EXP (OTG) postponed a $553 million deal at a $1.7 billion market value. Based in New York, the highly-levered company has an aggressive growth strategy (+40% in 2015) that targets food contracts for entire airport terminals but also results in lumpy revenue and a high cash burn. Advanced Disposal Services (ADSW), one of the largest private solid waste companies in the US, postponed its $450 million IPO at a proposed market cap of $1.5 billion; IPO proceeds were also slated to pay down its high level of debt. Insiders intended to sell on both offerings.
California Construction company Shimmick Construction (SCCI) and Norway-based REIT Nordic Realty Trust (NORT) had been on the IPO calendar as day-to-day since January, but officially postponed their IPOs this week.
With a shortened work week and companies updating year-end financials, there are no IPOs on the calendar for next week.
IPO Pipeline update: US Foods files for an estimated $1 billion IPO
After a wave of initial filings from biotechs through mid-January, filing activity has slowed in the past three weeks. LBO'd by KKR and CD&R, US Foods Holdings (USFD), the 10th-largest private company in the US based on revenue, filed for an IPO that we estimate could raise $1 billion or more. The last $1 billion IPO, KKR's First Data (FDC), is down 41% from its offer price.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is down 22% year-to-date, compared to -9% for the S&P 500. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Synchrony Financial (SYF), Alibaba (BABA) and Citizens Financial Group (CFG). The Renaissance International IPO Index is down 16% year-to-date, while the ACWX is down 11%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF Holdings include Japanese staffing firm Recruit Holdings and European insurance provider NN Group. To find out if this is the best ETF for you,
With markets off and volatility up; it is more difficult for issuers and IPO buyers to find agreeable price. So far, no operating companies have gone public in 2016. All four biotech IPOs this year have leaned on insiders to get done, and each trades below its offer price.
Final nough to end the biotech boom?
Underwritten by Goldman, early-stage gene therapy biotech AveXis (AVXS) raised $95 million - 12% more than anticipated - and closed its first day down 10%. At least 20% of proceeds were from existing investors, which included Deerfield, PBM Capital and Venrock. Gene therapy peers REGENXBIO (RGNX) and Dimension Therapeutics (DMTX) have lost 40% and 54%, respectively, from their 2H15 IPOs. Cystic fibrosis biotech Proteostasis Therapeutics (PTI) slashed its offer price and increased shares to raise $50 million - at least 40% from insiders - and proceeded to decline 17% on its first day. It finished Friday at $6.18, a 23% loss. Of note, the biotech's top two peers (Nivalis and ProQR Therapeutics) are worth less than the cash on their balance sheets.
Airport food doesn't take off; waste services thrown in the trash heap
Putting iPads in airports, concession operator OTG EXP (OTG) postponed a $553 million deal at a $1.7 billion market value. Based in New York, the highly-levered company has an aggressive growth strategy (+40% in 2015) that targets food contracts for entire airport terminals but also results in lumpy revenue and a high cash burn. Advanced Disposal Services (ADSW), one of the largest private solid waste companies in the US, postponed its $450 million IPO at a proposed market cap of $1.5 billion; IPO proceeds were also slated to pay down its high level of debt. Insiders intended to sell on both offerings.
California Construction company Shimmick Construction (SCCI) and Norway-based REIT Nordic Realty Trust (NORT) had been on the IPO calendar as day-to-day since January, but officially postponed their IPOs this week.
| The first two IPOs of 2016 traded up during the week of February 1, 2016 | |||||
| Company (Ticker) | Business | Deal size ($mm) | IPO price vs. midpoint | 1st-day pop | Return at 2/12 |
| AveXis (AVXS) |
Biotech: Gene therapy for rare disease | $95 | 0% | -10% | -11% |
| Proteostasis Therapeutics (PTI) | Biotech: Cystic fibrosis | $50 | -39% | -17% | -23% |
With a shortened work week and companies updating year-end financials, there are no IPOs on the calendar for next week.
IPO Pipeline update: US Foods files for an estimated $1 billion IPO
After a wave of initial filings from biotechs through mid-January, filing activity has slowed in the past three weeks. LBO'd by KKR and CD&R, US Foods Holdings (USFD), the 10th-largest private company in the US based on revenue, filed for an IPO that we estimate could raise $1 billion or more. The last $1 billion IPO, KKR's First Data (FDC), is down 41% from its offer price.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is down 22% year-to-date, compared to -9% for the S&P 500. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Synchrony Financial (SYF), Alibaba (BABA) and Citizens Financial Group (CFG). The Renaissance International IPO Index is down 16% year-to-date, while the ACWX is down 11%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF Holdings include Japanese staffing firm Recruit Holdings and European insurance provider NN Group. To find out if this is the best ETF for you,
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