U.S. IPO Weekly Recap: Out With The Old, In With The New

by: Renaissance Capital IPO Research

As we bid farewell to 2016, a few companies are already gearing up to kick off the new year, which we expect to be much stronger for IPOs. Four companies filed in the past week including APM provider AppDynamics (APDYN), metallurgical coal miner Ramaco (NASDAQ:METC), immunotherapy developer Jounce Therapeutics (NASDAQ:JNCE) and Swiss biopharmaceutical company ObsEva (NASDAQ:OBSV).

Although the IPO market had slow activity this year, with the fewest IPOs since 2009 (105) and the lowest proceeds since 2003 ($18.8 billion), the companies that did go public enjoyed strong returns. In 2016, the average IPO was up 26% and 70% of deals closed the year above their offer price.

AppDynamics, an application performance monitoring (APM) provider, filed for an IPO on Tuesday that we estimate could raise more than $150 million. It is set up to be the first unicorn to launch in 2017, breaking the ice for more venture capital-backed tech companies. This past year saw just 15 VC-backed tech IPOs. We expect more tech companies will soon join AppDynamics in filing once year-end results come in.

Ramaco, a newly-formed coal mining company with reserves in Wyoming, Virginia and West Virginia, filed for a $100 million IPO on Thursday, although the size is likely a placeholder and it could raise significantly more. As of the filing date, it has 170 million tons in proved recoverable reserves, and expects to have initial commercial production in the 1Q17. The company reportedly has over $5 billion in capital investments with lead investors Yorktown Energy Partners and Energy Capital Partners. It would be the first coal-mining company to go public since CONSOL Energy's MLP CNX Coal Resources (NYSE:CNXC) in June 2015, which is up 22% from its offer price.

Jounce Therapeutics, a clinical stage biotech developing cancer immunotherapies, filed for a $75 million IPO on Friday. The Cambridge, MA-based company began clinical trials for its lead product candidate JTX-2011 in August. In July, Jounce announced a collaboration with Celgene worth up to $2.5 billion, including $225 million paid up front with an additional $36 million equity investment.

ObsEva, a Switzerland-based biotech developing therapies for women's reproductive health and pregnancy, filed for an $86 million IPO on Friday. The company has four clinical stage candidates.

The IPO pipeline
In addition to the three filings, there were also two immaterial updates from IT infrastructure service provider Presidio (NASDAQ:PSDO) and metal and glass container provider Ardagh Group (ARD-OLD), along with updated clinical trial results for early-stage biotech AnaptysBio (NASDAQ:ANAB), which is developing antibodies for severe peanut allergies.

IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is flat year-to-date, while the S&P 500 is up 10%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include First Data (NYSE:FDC) and TransUnion (NYSE:TRU). The Renaissance International IPO Index is down 7% year-to-date, while the ACWX is up 2%. Renaissance Capital's International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Aena and ABN Amro.

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