IPO Recap And Outlook For 2015

This week's highlights:

  • 6 IPOs, including 3 biotechs and 2 payment firms, raised $1.4 billion ahead of the short week
  • Payment processor

    EVO Payments (NASDAQ:EVOP) was the week's winner, up 24%

  • Point-of-sale loan platform

    GreenSky (NASDAQ:GSKY) raised $874 million, opening -4% and finishing +8%

  • More new IPOs filings than any week since June 2015; expect a very active June

  • Slow week for IPOs coming up, but expect a number of launches

The average return for 2018 IPOs remained at about 23%. YTD IPOs have averaged a +13% first-day gain and +8% in the aftermarket. Currently, 68% of the year's 75 IPOs trade above issue. This past week, markets ticked slightly higher: Our IPO Index was up 0.3%, while the S&P 500 gained 0.5%. The VIX Volatility Index remained comfortably below 15.

6 IPOs During the Week of May 21st, 2018

Issuer

Business

Deal

Size

Market Cap

at IPO

Price vs.

Midpoint

First Day

Return

Return

at 05/25

EVO Payments

$224M

$1,234M

7%

+19%

+24%

Global merchant acquirer and full-service payment processor.

Kiniksa Pharmaceuticals (NASDAQ:KNSA)

$153M

$931M

0%

+8%

+8%

Developing therapies for inflammatory and autoimmune conditions.

GreenSky

$874M

$4,345M

5%

+2%

+8%

Operates a digital lending platform that facilitates merchant financing.

Scholar Rock (NASDAQ:SRRK)

$75M

$350M

0%

+11%

+7%

Biotech targeting growth factor inhibition for spinal muscular atrophy.

CLPS (NASDAQ:CLPS)

$11M

$70M

0%

+5%

+3%

Provides professional IT services to financial firms in China.

Iterum Therapeutics (NASDAQ:ITRM)

$80M

$184M

-13%

-1%

-1%

Developing oral and IV antibiotics for drug-resistant bacterial infections.

Payments IPOs Price Up Then Pay Up, Averaging +16%

EVO Payments priced at the high end of the range to raise $224 million, finishing the week with a 24% gain. EVO's payment processing peers have been on the rise, and the company may sustain its strong organic growth by repeating its success in Poland and Mexico in other markets with low penetration of electronic payments.

GreenSky raised $874 million - 17% more than expected - at a $4.3 billion market cap. All proceeds went to insiders. The stock opened below issue, very unusual for a deal that prices at the high end of the range, and finished its first day up just 2%. Large deals generally have lower pops. The digital lending platform then surged 6% on Friday. Greensky's valuation hinges on it maintaining its high growth and strong margins. It should see upside if it successfully enters elective healthcare lending, assuming its core position in US home improvement spending remains strong.

Three Biotechs Average +5%; Below Average, but Better Than Recent Biotechs

Scholar Rock Holding raised $75 million by pricing at the midpoint. The company traded up 11% on its first day, in line with the YTD average but better than the previous 7 biotechs. Backed by Fidelity, Polaris, ARCH VP and others, Scholar Rock is targeting spinal muscular atrophy, the same indication as 2016 IPO

AveXis (NASDAQ:AVXS), recently acquired for $8.7 billion. However, it is still very early stage.

Kiniksa Pharmaceuticals raised $153 million at a market cap of $931 million, the year's second-largest biotech to go public. It traded up 8%. Having raised over $320 million from Baker Bros. and others, the biotech now has over $350 million in cash to develop its in-licensed drug candidates targeting inflammatory and autoimmune conditions. Close peer

InflaRx (NASDAQ:IFRX) is up more than 125% from its November 2017 IPO.

Iterum Therapeutics offered additional shares at $13, below the range, to raise its targeted $80 million. It declined 1%. Developing antibiotics for drug-resistant infections, Iterum has three candidates in Phase 3 trials. However, peer trading has been mostly negative, with Melinta (NASDAQ:MLNT) and Spero (NASDAQ:SPRO) down about 65% and 13%, respectively, this year.

Short for ChinaLink Professional Service,

CLPS raised $10.5 million at a market cap of $70 million by pricing at the $5.25 midpoint. The IT services provider traded up just 3%. After a slow fiscal 2017, sales grew 55% to $22 million with operating income of $1 million in the six months ended December, 2017, the most recent period that it provided.

US IPO Pipeline Update: 14 new filings, biggest week since June 2015

This week, the IPO pipeline saw

thirteen new additions, plus one SPAC. That is the highest weekly filing count since June 2015. Mostly healthcare and nothing huge: KKR-backed RIA consolidator

Focus Financial Partners (NASDAQ:FOCS) was the largest with an estimated deal size of $300 million. The latest wave of new filers follows the 6 (+2 SPACs) that came in the prior week. That points to an active IPO market in June.

13 Filings & 1 SPAC During the Week of May 21st, 2018

Issuer

Business

Deal

Size

Sector

Lead

Underwriter

AVROBIO (NASDAQ:AVRO)

$86M

Health Care

Morgan Stanley

Developing gene therapies to treat cancer and rare diseases.

Carbon Natural Gas (OTCPK:CRBO)

$75M

Energy

RBC

Oil and gas E&P operating in the Appalachian, Illinois and Ventura Basin areas.

Eidos Therapeutics (NASDAQ:EIDX)

$115M

Health Care

JP Morgan

Developing a novel oral therapy for rare neurodegenerative diseases.

Essential Properties (NYSE:EPRT)

$100M

Real Estate

Goldman

Triple-net-lease REIT that manages single-tenant commercial properties.

i3 Verticals (NASDAQ:IIIV)

$86M

Technology

Cowen

Provides integrated payment processing and software to SMBs.

Focus Financial Partners

$300M

Financials

Goldman

Operates a national network of more than 50 independent wealth managers.

Kezar Life Sciences (NASDAQ:KZR)

$81M

Health Care

Jefferies

Developing small molecule therapeutics to treat autoimmune diseases and cancer.

Magenta Therapeutics (NASDAQ:MGTA)

$100M

Health Care

JP Morgan

Developing novel therapies to make stem cell transplants more effective.

Xeris Pharmaceuticals (NASDAQ:XERS)

$75M

Health Care

Jefferies

Developing a novel formulation of an injectable hypoglycemia treatment.

Aptinyx (NASDAQ:APTX)

$80M

Health Care

JP Morgan

Developing therapeutics for neurological disorders.

HyreCar (NASDAQ:HYRE)

$11M

Technology

Network 1

Provides a peer-to-peer car-sharing marketplace.

Far Point Acquisition (FPAC.U)

$400M

SPAC

Credit Suisse

Blank check company formed by former NYSE Group President Tom Farley and Third Point to acquire a fintech business.

Verrica Pharmaceuticals (NASDAQ:VRCA)

$86M

Health Care

BofA ML

Developing a drug-device that administers cantharidin for warts and skin diseases.

ElectroCore (NASDAQ:ECOR)

$75M

Health Care

Piper Jaffray

Commercializing a non-invasive nerve stimulation device for treating migraines.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index has returned 3.3% year-to-date, while the S&P 500 is up 2.8

% . Renaissance Capital's IPO ETF (NYSEARCA:IPO) tracks the index, and top ETF holdings include

Spotify (NYSE:SPOT) and

Snap (NYSE:SNAP). The Renaissance International IPO Index is down -1.1% year-to-date, while the ACWX is down -0.1%. Renaissance Capital's International IPO ETF (NYSEARCA:IPOS) tracks the index, and top ETF holdings include

Orsted (DONG Energy) (OTCPK:DNNGY) and

Samsung BioLogics.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

Source : https://seekingalpha.com/article/4177536-u-s-ipo-weekly-recap-payment-ipos-pay-6-deals-price-ahead-memorial-day

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