Next week marks the beginning of the 2016 IPO market.
With trouble brewing in China's markets and a nosedive in the US markets to start the year (S&P 500: -6.0% this week), the 2016 IPO market may have some trouble getting off the ground. However, there were signs of life this week, at least in terms of initial filings with the SEC. After just 10 companies filed in December 2015, 12 companies filed this week (which we discuss in our US IPO Weekly Recap). No companies launched their IPOs this week, but the first IPO of 2016 is on the calendar next week.
No gimmicks: Shimmick Construction to be the first IPO of 2016
Management-owned Shimmick Construction (NASDAQ:SCCI) provides heavy civil construction services to federal, state and local agencies in California. Projects include bridges, including a seismic and wind retrofit of the Golden Gate Bridge, transit and rail, including the LA Metro and the Bay Area rail system, water and wastewater treatment facilities, dams, highways, ports and airports. The company believes it will benefit from recent California state and US federal transportation bills aimed at improving infrastructure over the next five years. Shimmick has an $8 billion backlog, $2 billion of which it is currently bidding, which it believes will cause its $618 million backlog to jump, accelerating revenue growth in 2017. This week, the company expects to raise $75 million at a valuation of $184 million.
IPO Market Snapshot
In 2015, 170 companies raised $30 billion. The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is down 5% year-to-date, compared to -4.5% for the S&P 500. Renaissance Capital's IPO ETF (NYSEARCA:IPO) tracks the index, and top ETF holdings include Synchrony Financial (NYSE:SYF), Alibaba (NYSE:BABA) and Citizens Financial Group (NYSE:CFG). The Renaissance International IPO Index is down 2% year-to-date, compared to -7% for ACWX. Renaissance Capital's International IPO ETF (NYSEARCA:IPOS) tracks the index, and top ETF Holdings include Recruit Holdings and NN Group.