U.S. IPO Weekly Recap: 2 IPOs Start Off The Annual August Lull

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Includes: AKCA, APRN, CIC.U, CMTA, CVNA, ELIO, FND, FTSI, LBM, RDFN, SGH, SNAP, TNTR-OLD, TRMT, VNTR
by: Renaissance Capital IPO Research

Two IPOs raised a combined $574 million this past week and notched modest gains. Pigments supplier Venator Materials (NYSE:VNTR) raised $454 million and ultra-rare bone disease biotech Clementia Pharmaceuticals (NASDAQ:CMTA) raised $120 million.

July 2017 was the least active July since the financial crisis with nine IPOs. Per usual, August should also have a tepid pace; with just three deals scheduled for the week ahead, it could end up as the slowest August in six years. However, we expect normal deal flow to resume after Labor Day.

Tech stocks slid this past week with Tintri (NASDAQ:TNTR-OLD), Blue Apron (NYSE:APRN), Snap (NYSE:SNAP) and Carvana (NYSE:CVNA) all experiencing losses. Average aftermarket return declined to 0.4%, nearing its 2017 low. However, high-growth Redfin (NASDAQ:RDFN) popped 45% on its IPO and continued to trade up this week; it is now the second-best performing IPO of the year behind Akcea Therapeutics (NASDAQ:AKCA), another July IPO. Other growth companies such as Floor & Decor Holdings (NYSE:FND) and SMART Global Holdings (NASDAQ:SGH) have also performed well this year.

2 IPOs During the Week of July 31, 2017

Issuer
Business

Deal Size
($mm)

Market Cap
at IPO ($mm)

Price vs.
midpoint

First day
return

Return
at 8/4

Venator Materials

$454

$2,125

-4.8%

+3.3%

+3.2%

Manufacturer of titanium dioxide pigments and additives spun out of Huntsman (NYSE:HUN).

Clementia Pharmaceuticals

$120

$495

+7.1%

+9.0%

+7.3%

Clinical-stage biotech focused on treating bone diseases.

An immaterial gain for Venator

Huntsman spin-off Venator Materials offered 22.7 million shares at the $20 low end of the range to raise $454 million. The TiO2 pigments and additives manufacturer finished the week up 3%. Venator has rapidly grown segment EBITDA, and its peers have traded well; however, Huntsman's plan to sell down its position over the next year likely weighs on investors' minds. Venator's long-term success depends on the continued rebound of the cyclical TiO2 industry.

Upsized offering for ultra-rare bone disease biotech

Clementia Pharmaceuticals priced an upsized offering of 8 million shares at the $15 high end of the range. Backers OrbiMed, NEA and others indicated on $30 million of the IPO. Since May, the average biotech IPO has returned +17% and short-term trading could be buoyed by positive Phase 2 data. However, key issues include a tiny target population and increased scrutiny of drug prices.

IPO pipeline update: Cars, construction and diagnostics

Elio Motors (OTCQB:ELIO), which is developing fuel-efficient three-wheeled vehicles, filed for a $100 million IPO; it previously raised $16 million in a Regulation A filing in February 2016, when it listed on the OTCQX. ReTo Eco-Solutions (NASDAQ:RETO), a Chinese supplier of eco-friendly construction materials, filed to raise $14 million. Lung cancer diagnostics firm ProLung (LUNG) filed for an $8 million IPO. Newly-formed mortgage REIT Tremont Mortgage Trust (NASDAQ:TRMT), home builder US LBM (LBM) and fracker FTS International (NYSE:FTSI) all updated their filings this week. Two SPACs, I-AM Capital Acquisition (NASDAQ:IAMXU) and Capitol Investment Corp. IV (NYSE:CIC.U) also updated their fillings.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is up 23.6% year-to-date, ahead of the S&P 500, which is up 10.6%. Renaissance Capital's IPO ETF (NYSEARCA:IPO) tracks the index, and top ETF holdings include Ferrari (NYSE:RACE) and First Data (NYSE:FDC). The Renaissance International IPO Index is up 21.4% year-to-date while the ACWX is up 17.9%. Renaissance Capital's International IPO ETF (NYSEARCA:IPOS) tracks the index, and top ETF holdings include ABN AMRO Group (OTCPK:ABNRY) and Worldpay (OTC:WPYGY).

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.