U.S. IPO Weekly Recap: Sonos Surges 40% In IPO Week With Real Estate And Smart Devices


Three IPOs and two SPACs hit public markets this past week, raising $1.1 billion.

Smart devices were a smart investment. Connected speaker company Sonos (SONO) and camera maker Arlo Technologies (ARLO) each had to price below the range, but then delivered returns of more than 30%. Cushman & Wakefield (CWK), the nation's third-largest commercial real estate brokerage, raised more than both combined in its $765 million IPO, and traded up 9%.

Sonos and Arlo: Cut and Run (up): Despite strong gains from recent growth IPOs, investors were disciplined on valuations for the consumer tech names. The market's sell-off at the beginning of the week was likely a factor. But both Sonos and Arlo had a few notable risks. KKR-backed Sonos is a well-loved brand in a market with secular growth, but quarterly sales have been extremely lumpy and its profit margins are below peers. NETGEAR (NTGR) spin-off Arlo posted stellar growth with a leading market position, but its gross margins are relatively low and its subscription service has yet to take off. Both compete heavily with Amazon (AMZN) and Google (GOOG) (GOOGL).

Cushman & Wakefield was less exciting, but delivered a solid 9% gain by pitching itself at a clear discount to its closest two comps.

Private equity's record level of fundraising dry powder may be spilling over into the IPO market. This past week, two SPACs went public, bringing the 2018 total up to 26. That puts us on pace for another record year.

July 2018 wrapped up with 20 IPOs, the biggest July since 2014 (33). The IPO index (IPOUSA) finished the month at about where it started. Activity is winding down heading into August, but the torrid pace of summer should continue in the fall.

5 IPOs During the Week of July 30th, 2018



Market Cap
at IPO

Price vs.

First Day

at 08/03







Designs and sells connected speakers and audio components.

Arlo Technologies






Smart security camera maker being spun out of NETGEAR.

Cushman & Wakefield






Global commercial real estate brokerage and services firm.

Tottenham Acquisition (TOTAU)






Chinese blank check company formed to acquire a TMT business.

Forum Merger II (FMCIU)






Black check company formed by SPAC veterans David Boris and Marshall Kiev.

Sonos raised $208 million by offering 13.9 million shares at $15, below the range of $17 to $19. Insiders sold 60% of the offering. At offering, Sonos had a fully diluted market value of $1.7 billion, 21% below the proposed $2.2 billion. Sonos listed on the Nasdaq under the symbol SONO. Morgan Stanley, Goldman Sachs, Allen & Company, RBC Capital Markets, Jefferies and KKR acted as lead managers on the deal.

Arlo Technologies raised $163 million by offering 10.2 million shares at $16, below the range of $18 to $20. At offering, Arlo had a fully diluted market value of $1.1 billion, 16% lower than expected. Arlo listed on the NYSE under the symbol ARLO. BofA Merrill Lynch, Deutsche Bank, and Guggenheim Securities acted as lead managers on the deal.

Cushman & Wakefield raised $765 million by offering 45 million shares at $17, the midpoint of the $16 to $18 range. The company raised an additional $174 million in a concurrent private placement from real estate developer China Vanke. Cushman listed on the NYSE under the symbol CWK. Morgan Stanley, J.P. Morgan, Goldman Sachs, UBS Investment Bank, Barclays, BofA Merrill Lynch, Citi, Credit Suisse and William Blair acted as lead managers on the deal.

Forum Merger II raised $200 million by offering 20 million units at $10. Each unit consists of one share of common stock and one warrant exercisable at $11.50 per share. The New York-based SPAC listed on the Nasdaq under the symbol FMCIU. Jefferies acted as lead manager on the deal. Co-CEOs David Boris and Marshall Kiev bring experience from SPACs ConvergeOne (CVON) and Borqs Technologies (BRQS).

Tottenham Acquisition I raised $40 million by offering 4.0 million units at $10. Units consist of one share, one warrant to purchase one-half of one share (whole warrants exercisable at $11.50), and one right to receive one-tenth of one share upon the company's acquisition. The Chinese SPAC listed on the Nasdaq under the symbol TOTAU. Chardan Capital Markets acted as lead manager on the deal.

2 Filings During the Week of July 30th, 2018





Elanco Animal Health (ELAN)




Spin-off of Eli Lilly's (LLY) global animal health medicines and vaccines business.

TKK Symphony Acquisition (TKKSU)



Early Bird

Blank check company formed to acquire a consumer products business in China.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is up 6% year-to-date, while the S&P 500 is up 7%. Renaissance Capital's IPO ETF (IPO) tracks the index, and top ETF holdings include Spotify (SPOT) and Athene (ATH). The Renaissance International IPO Index is down 6% year-to-date, while the ACWX is down 3%. Renaissance Capital's International IPO ETF (IPOS) tracks the index, and top ETF holdings include Delivery Hero (OTCPK:DLVHF) and Siemens Healthineers (OTCPK:SMMNY).

This article was written by

Renaissance Capital provides pre-IPO research to institutional investors and investment banks. The Firm manages two IPO-focused funds: The Renaissance IPO ETF (NYSE: IPO) and the Renaissance International IPO ETF (NYSE: IPOS). Individual investors can get a free overview of the IPO market on www.renaissancecapital.com, and try a free trial of our premium platform, IPO Pro (ipopro.renaissancecapital.com). Through Renaissance Capital’s pre-IPO research service, institutional investors get an independent opinion, in-depth fundamental analysis, and customizable financial models on all IPOs.
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