U.S. IPO Weekly Recap: 6 New Filings Signal An Active Fall

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Includes: BSTI, DESP, TRMT
by: Renaissance Capital IPO Research

No IPOs priced during the shortened holiday week, but new filing activity remained strong: there have been 15 filings over the past two weeks, signaling a busy October. Six companies set terms this week, including Alibaba (NYSE:BABA)-backed logistics firm Best (BESTI), Latin American online travel agency Despegar.com (NYSE:DESP), mortgage REIT Tremont Mortgage Trust (NASDAQ:TRMT) and three micro-cap biotechs.

2017 IPO performance continued to rally; the YTD average total return is 20.5% from the IPO price, including 9.3% from aftermarket trading. Biotechs, in particular, fueled the recent run-up; this year's 20 biotech IPOs average a total return of 39.7% with aftermarket returns of 27.7%.

9 Filings During the Week of September 4, 2017

Issuer
Business

Deal Size
($mm)

Sector

Lead Underwriter

Loma Negra

$500*

Materials

BofA Merrill Lynch

Leading Argentine cement producer.

Switch

$300*

Technology

Goldman Sachs

Operates data centers and provides data management systems.

MPM Holdings

$200*

Materials

TBD

Restructured global producer of specialty silicones and other chemical additives.

Rhythm Pharmaceuticals

$115

Health Care

Morgan Stanley

Clinical-stage biotech developing peptide-based therapies for genetic obesity.

Hancock Jaffe Laboratories

$15

Health Care

Network 1 Financial

Developing bioprosthetic devices for cardiovascular surgeries.

Adial Pharmaceuticals

$14

Health Care

Aegis Capital

Developing a targeted therapy for alcohol use disorder based on an approved drug.

*Deal size is RC estimate

US IPO Pipeline Update

Six companies joined the IPO pipeline, expecting to raise a combined $1.1 billion. Argentine cement producer Loma Negra (NYSE:LOMA) plans to raise an estimated $500 million; the company plans to sell shares in both Argentina and New York. Intel (NASDAQ:INTC)-backed data center operator Switch (NYSE:SWCH) filed to raise an estimated $300 million. During the 1H17, the company posted 17% revenue growth ($181 million) as customer count rose 10% to 808 at period-end. Momentive (MPMH), a restructured global producer of specialty silicones, ceramics and quartz, plans to raise up to $100 million; it is currently listed on the OTC Markets under the ticker OTCQX:MPMQ and closed on Thursday with a market cap of $778 million. Rhythm Pharmaceuticals (NASDAQ:RYTM), a clinical-stage biotech focused on peptide-based therapeutics to treat genetic obesity, plans to raise up to $115 million. The company successfully sold its last development drug, relamorelin, to Allergan (NYSE:AGN) in 2014 for $200 million after positive phase 2 results. Bioprosthetic device maker Hancock Jaffe Laboratories (HJL.RC) and alcohol-abuse biotech Adial Pharmaceuticals (NASDAQ:ADIL) filed to raise $15 million and $14 million, respectively.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is up 25.6% year-to-date, ahead of the S&P 500, which is up 9.9%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Ferrari (NYSE:RACE) and First Data (NYSE:FDC). The Renaissance International IPO Index is up 24.0% year-to-date, while the ACWX is up 18.7%. Renaissance Capital's International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include ABN AMRO Group and Worldpay.