U.S. IPO Weekly Recap: Post-Holiday Week Sees Temporary IPO Lull

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Includes: GEMP, LN, TCMD, TLND, YETI
by: Renaissance Capital IPO Research

The shortened holiday week saw a lull in activity, with no US IPOs pricing and just three filings. Uncertainty related to the aftermath of the Brexit vote faded as the S&P 500 closed the week at 2,129, its highest close ever.

The market has been slow for a few weeks, evidenced by the fact that just two companies have set terms in the last three weeks. For the third week straight, Gemphire Therapeutics (Pending:GEMP) and Tactile Systems Technologies (Pending:TCMD) pushed their IPOs to next week. Both deals are currently day-to-day. However, with June's 17 IPO filings, there is reason for optimism going forward. Both Talend (NASDAQ:TLND) and Yeti (Pending:YETI) will be eligible to set terms towards the end of the month, but all eyes are currently on LINE (NASDAQ:LN), which is expected to price on July 11 and commence trading in New York on July 14.

In an otherwise slow week, SPACs were a bright spot. On the heels of last week's announcement that Hostess will go public through Gores Holdings (GRSHU), M III Acquisition (MIIIU), a blank-check company led by turnaround expert Mohsin Meghji, raised $150 million this week. The sixth SPAC of 2016 showed that investors looking for lower-risk investments are still willing to place their money with strong management teams.

IPO Pipeline Update
Just three companies submitted initial filings this week. First Hawaiian Bank (NASDAQ:FHB) filed with a placeholder deal size of $100 million; we estimate that it could raise as much as $1 billion. CBS Radio (Pending:CBSR) also filed with a placeholder for an IPO that we estimate could raise as much as $500 million. The last filing, Forterra (FTRA), which filed to raise up to $100 million, is the US division of a business that was bought by Texas-based Lone Star Funds. Lone Star bought predecessor Hanson Building Products from HeidelbergCement in March 2015 for $1.4 billion, and split the company into a UK division (Forterra (FORT.LN)), which went public in London in April, and a US division.

IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is down 6% year-to-date, while the S&P 500 up 4%. 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 9.4% year-to-date (as of Thursday's close), compared to -2.1% (also as of Thursday) for ACWX. Renaissance Capital's International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Recruit Holdings, NN Group and Aena S.A.