U.S. IPO Weekly Recap: IPO Market Strengthens With 3 Deals

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Includes: ARA, BATS, FDC, HOME, MGP, SCWX, VIVE, YIN
by: Renaissance Capital IPO Research

After Bats Global Markets (BATS:BATS) successful IPO last week (+21% first day), three more large, revenue producing companies raised $1.3 billion this week, more than doubling this year's proceeds.

Following Bats's lead, MGM Growth Properties and American Renal Associates also priced above the midpoint and traded up on their debuts, marking the first time three deals in a row have done so since the IPO market began to turn down in August 2015. Meanwhile, the S&P rose 0.5%, the US IPO Index rose 1.9% and the VIX Volatility Index dropped 2.6% to 13.3. The combination of these factors has provided a solid foundation for the IPO market as we move into the seasonally active May and June months (15+ deals/month average).

IPO market goes three for three
MGM Growth Properties (NYSE:MGP) raised $1.05 billion by pricing 50 million shares at $21, the high end of the $18-$21 range, representing the first billion dollar IPO since First Data (NYSE:FDC) in October 2015.

American Renal Associates (NYSE:ARA) raised $165 million by pricing 7.5 million shares at $22, within the $20-$23 range, representing the first LBO since First Data. The IPO was welcomed with a 21% first day pop.

SecureWorks (NASDAQ:SCWX) raised $112 million by pricing a downsized 8 million shares at $14, below the $15.50-$17.50 range, representing the first tech IPO of 2016. The muted investor enthusiasm may serve as a wake-up call for money losing tech companies in the pipeline.

Diverse offerings build foundation for IPO market
Company (Ticker) Business Deal size ($mm) IPO price vs. midpoint First Day Pop
MGM Growth Properties MGM Resorts-backed REIT $1,050 +7.7% +4.8%
American Renal Associates Dialysis center operator $165 +2.3% +20.5%
SecureWorks IT security solutions $112 -15.2% 0.0%
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IPO Pipeline Update
Chinese online metals exchange Yintech Investment Holdings (NASDAQ:YIN) set terms to raise $101 million. Four health care companies submitted initial filings: Gemphire Therapeutics (Pending:GEMP), a cardiovascular biotech ($60 million), PhaseRx (Pending:PZRX), a preclinical biotech ($30m), Viveve Medical (Pending:VIVE), a medical device maker ($10m) and Performance Health Holdings (NYSEMKT:PHC), designer of rehabilitation and wellness products ($100m). Two SPACs filed and set terms: M III Acquisition (MIIU) looking to raise $175 million and CF Corporation (CFCOU) looking to raise $600 million, with an additional $500 million commitment on the acquisition announcement. Wholesale landscaping distributor SiteOne Landscape Supply (NYSE:SITE) updated financials and at home decor superstore operator At Home Group (NASDAQ:HOME) also updated financials ahead of their respective estimated $200 million IPOs.

IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is down 3% year-to-date, while the S&P 500 is up 2%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Alibaba (NYSE:BABA), Synchrony Financial (NYSE:SYF) and Citizens Financial Group (NYSE:CFG). The Renaissance International IPO Index is down 1% year-to-date, compared to +3% for ACWX. Renaissance Capital's International IPO ETF (NYSE: IPOS) tracks the index, and top ETF Holdings include NN Group and Aena S.A.