Seven IPOs and one SPAC entered public market this past week. Life sciences software maker Schrödinger (NASDAQ:SDGR) rocketed in its debut and contract researcher PPD (NASDAQ:PPD) completed 2020’s second billion-dollar deal, while mattress unicorn Casper (NYSE:CSPR) disappointed. Record label giant Warner Music (WMGC.RC), a building products maker, and a biotech submitted initial filings.
Schrödinger priced above the range to raise $202 million at a $1.1 billion market cap and popped 68% on its first day. The company is unprofitable, but it has large and sticky customers and a broad drug pipeline with a mix of internal programs and collaborations. Schrödinger finished up 88%.
In the year’s biggest deal yet, PPD joined the Billion-Dollar IPO Club by pricing at the high end to raise $1.6 billion at a $9.4 billion market cap. The company operates in a crowded space with large competitors, but has established itself as a global CRO of choice with clients including the top 50 biopharmas worldwide. PPD finished up 15%.
After slashing its valuation by 34%, Casper Sleep priced at the low end to raise $100 million at a $487 million market cap, less than half of its last private valuation. Despite leading the highly competitive DTC mattress market, investor taste has continued to shift away from money-losing unicorns. It opened 21% above its IPO price, but finished the week down 8%.
Preclinical gene editing biotech Beam Therapeutics (NASDAQ:BEAM) upsized its offering by 69% and priced at the high end to raise $180 million at a $906 million market cap, making it one of the largest preclinical biotech IPOs ever. Despite its early stage and unproven approach, Beam finished up 21%, continuing a hot streak for biotechs.
Recreational boat roll-up OneWater Marine (ONEW) priced at the bottom of the lowered range to raise $55 million at a $166 million market cap. The company originally planned to raise $60 million at a $181 million market cap but postponed in October 2019. Bolstered by strong performances from its peers, OneWater finished up 26%.
Mortgage REIT NexPoint Real Estate Finance (NYSE:NREF) priced at the low end to raise $95 million at a $335 million market cap, and finished down 1%. Florida bank Professional Holding Corp. (OTCPK:PFHD) priced slightly below the range to raise $57 million at a $232 million market cap, and finished up 6%.
|
Issuer |
Deal |
Market Cap |
Price vs. |
First Day |
Return |
|---|---|---|---|---|---|
|
Schrödinger |
$202M |
$1,111M |
13% |
+68% |
+88% |
|
Provides a software platform for life sciences and materials research. |
|||||
|
OneWater Marine |
$55M |
$166M |
-37% |
+26% |
+26% |
|
Recreational boat dealership that owns and operates 63 stores in the US. |
|||||
|
Beam Therapeutics |
$180M |
$906M |
6% |
+10% |
+21% |
|
Preclinical biotech developing therapies based on single-base gene editing. |
|||||
|
PPD |
$1,620M |
$9,423M |
6% |
+11% |
+15% |
|
LBO’d contract research organization that provides drug development services. |
|||||
|
Professional Holding Corp. |
$57M |
$232M |
-8% |
+6% |
+6% |
|
Florida bank with nine locations across the Miami-Dade MSA. |
|||||
|
InterPrivate Acquisition (IPV.U) |
$210M |
$261M |
0% |
+1% |
+1% |
|
Blank check company backed by merchant bank InterPrivate and led by its founder Ahmed Fattouh. |
|||||
|
NexPoint R.E. Finance |
$95M |
$335M |
-5% |
-1% |
-1% |
|
Newly formed mortgage REIT focused on single-family rental and multifamily loans. |
|||||
|
Casper |
$100M |
$487M |
-33% |
+13% |
-8% |
|
Direct-to-consumer mattress and bedding brand. |
|||||
Two companies filed for IPOs this past week. Taken private by Access Industries in 2011 for $3.3 billion, Warner Music Group filed to return to the public markets with an IPO we estimate could raise $750 million. Building products maker The AZEK Company (AZEK) filed for an estimated $500 million IPO, and preclinical rare disease biotech Passage Bio (PASG) filed to raise $125 million.
|
Issuer |
Deal |
Sector |
Lead |
|---|---|---|---|
|
AZEK |
$500M |
Industrials |
Barclays |
|
Manufactures composite residential and commercial building products. |
|||
|
Warner Music |
$750M |
Communication Services |
Morgan Stanley |
|
Leading music publisher and record label. |
|||
|
Passage Bio |
$125M |
Health Care |
JP Morgan |
|
Preclinical biotech developing gene therapies for rare CNS disorders. |
|||
In other IPO news, workplace app Asana reportedly submitted a confidential filing with the SEC for a direct listing rather than a traditional IPO. Asana would join the ranks of other non-traditional tech unicorns Slack (NYSE:WORK) and Spotify (NYSE:SPOT), both of which have experienced rocky trading.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 2/6/20, the Renaissance IPO Index was up 8.4% year-to-date, while the S&P 500 had a gain of 3.6%. Renaissance Capital’s IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Uber (NYSE:UBER) and Spotify. The Renaissance International IPO Index was up 4.4% year-to-date, while the ACWX was down 0.2%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Adyen and SoftBank.
Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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