U.S. IPO Recap: Chinese IPOs Continue Their Strong Run

by: Renaissance Capital IPO Research

Six companies completed U.S. IPOs last week, and all but one gained more than 10% in early trading. Chinese lottery service provider 500.com (NYSE:WBAI) was the top performer, gaining 54% after pricing above the range. Vince (NYSE:VNCE), a high-end apparel retailer, was close behind with a 43% first-day gain. The Renaissance IPO ETF (NYSEARCA:IPO), a measure of post-IPO returns, was down slightly for the week. Two companies set terms, and a large HR outsourcing company, TriNet Group (TRINET), was the week's only new filer. The IPO count for 2013 reached 209, and the $49 billion raised this year is now the highest annual total since 2000.

U.S. IPOs from China averaging >80% returns

500.com and Android app developer Sungy Mobile (NASDAQ:GOMO), which traded up 19%, were the fourth and fifth Chinese companies to complete U.S. IPOs this fall. All but Sungy are trading more than 50% above their offer prices. Going back to 2012, the nine U.S. IPOs from China have produced an average return of 203% (87% excluding Vipshop's (NYSE:VIPS) 1,127% return).

Four deals postponed

Four U.S. IPOs were postponed last week. Three of the postponements came from biotechs, signaling a further cooling in the once hot sector (the average return in June was above 30%). The fourth postponement came from GFI Software (Pending:GFIS), which provides collaboration and remote IT management software to small businesses. Despite its acceleration in billings (up 26% to $52 million in the 3Q13) and large addressable market, GFI likely faced pushback over its exposure to the weak European market (EMEA was 56% of YTD billings) and heavy competition.

IPO pricings (week of November 18, 2013)
Company (Ticker) Business Deal Size ($mm) IPO Price vs. Midpoint Return as of 11/22
500.com (WBAI) Chinese lottery $75 30% 54%
Vince (VNCE) High-end apparel $200 11% 43%
Oxford Immunotec Global (NASDAQ:OXFD) Tuberculosis diagnostics $64 -14% 28%
Sungy Mobile (GOMO) Android apps $79 7% 19%
Evogene (NYSE:EVGN) Enhanced seeds $74 -14% 13%
Navigator Holdings (NYSE:NVGS) Liquefied gas carriers $228 6% 6%
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Timberlands REIT and early-stage diagnostics company set terms

Two companies set terms last week. CatchMark Timber Trust (NYSE:CTT), a timberlands REIT, is seeking to raise $150 million. It owns interests in 280,000 acres of timberlands in the southeastern US. Its revenue declined 30% to $25 million in the nine months ended September 30 due to lower harvest volumes. Biocept (NASDAQ:BIOC), which develops and markets cancer diagnostic tests, is looking to raise $20 million.

At least 30 companies could launch shortly after Thanksgiving

While filing activity will likely remain light during the short week, we expect an end-of-the-year surge to come shortly after the holiday. In the last 30 days, 36 companies (excluding those that have postponed IPOs) have submitted new or updated IPO filings. Some of the biggest names in this group are Hilton Worldwide (HWW.RC), Chrysler (CYSR.RC), ARAMARK (NYSE:ARMK) and Southeastern Grocers (SEG).

IPOs setting terms (week of November 18, 2013)
Company (Ticker) Business Deal Size ($mm) LTM Sales ($mm)
CatchMark Timber Trust (CTT) Timberlands REIT $150 $55
Biocept (BIOC) Cancer diagnostics $20 $0
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Human resources outsourcing company files for $250 million IPO

TriNet Group, which provides human resources solutions to small businesses, filed for a $250 million IPO. The company previously tried to go public in 2000. At the time, it had just $26 million in annual sales; LTM revenue is now up to $1.5 billion. Its clients include over 8,000 small businesses across 47 states and Canada, covering over 218,000 employees.

New IPO filers (week of November 18, 2013)
Company (Ticker) Business Deal Size ($mm) LTM Sales ($mm)
TriNet Group (TRINET) HR outsourcing $250 $1,477
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IPO market snapshot

The 209 IPOs in 2013 have raised $49.3 billion and produced an average return of 28%. Post-IPO returns have been strong this year. The IPO Index, which is tracked by the Renaissance IPO ETF (symbol IPO), is up 49% year-to-date. There have been 78 IPOs in the past 90 days, with total proceeds of $20.9 billion and an average return of 24%. The active IPO pipeline includes 90 companies looking to raise a total of $26.5 billion.