The IPO market is starting to pick up steam with 13 deals raising $2.3 billion year to date. Most importantly, the last four were non-biotechs with a healthy average return of 12%. Three more deals are slated to raise $638 million in the week ahead, and each one has a dividend. A leading indicator of a receptive IPO market, the Renaissance IPO Index has gained +27% since its Feb. 11 low (S&P is up 14%).
What happens in Vegas, stays relevant to IPO issuance
LBO'd casino operator Red Rock Resorts (NYSE:RRR) hopes to raise $531 million in what would be the year's first consumer deal and second-largest offering, behind fellow Las Vegas casino deal MGM Growth Properties LLC (MGP; $1.05 billion raised). That REIT's debut demonstrated strong interest in the rebounding Las Vegas market, and Red Rock could benefit similarly. While its current owners have set themselves up to hit the jackpot and receive all IPO proceeds, Red Rock has successfully paid down debt while improving profit margins since coming out of bankruptcy in 2011.
China's Yintech goes for the gold (and silver)
Looking to raise $101 million, Yintech Investment Holdings (NASDAQ:YIN) is China's largest provider of online spot commodity trading services ($102 billion in 2015 volume; 4% share), a market that has surged at a 35% CAGR since 2011. The profitable company has experienced rapid growth with lumpy earnings. Underwritten by Jefferies and PingAn Securities, we expect the deal is marketed largely to Asian investors.
Arizona-based microcap water utility Global Water Resources (NASDAQ:GWRS) could also go public this week as it hopes to refinance its debt.
|Renaissance Capital's IPO Calendar - Week of 4/25/2016|
|Red Rock Resorts
Las Vegas, NV
|$531||$18.00 - $21.00
|Operates 21 regional casino properties primarily in Las Vegas.|
|Yintech Investment Holdings
|$101||$12.50 - $14.50
|Operates an online brokerage for spot trading precious metals in China.|
|Global Water Resources
|$6||$5.25 - $6.25
|Operates water and wastewater utilities in metropolitan Phoenix, AZ.|
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.