U.S. IPO Week Ahead: SolarWinds Headlines 8-IPO Week With Tech, Biotech And China

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Includes: AROG, GMDA, GRAF.U, LOGC, MSC, NGM, NIU, PHAS, REPX, RVLV, SIBN, SMY, STNE, SWI, VTEC, YETI
by: Renaissance Capital IPO Research

Eight IPOs plan to raise $1.6 billion in the week ahead. Tech, biotech and China have been key drivers of 2018 IPO activity, and more of each are scheduled for the week ahead. Each of the three segments was hit particularly hard during the recent sell-off, but had a nice recovery on Friday.

LBO'd in 2016 by Silver Lake and Thoma Bravo, SolarWinds' $756 million IPO accounts for almost half of weekly proceeds. A leading provider of IT infrastructure management software, SolarWinds has 17% growth and strong free cash flow. The week's other tech deal is Valtech, a profitable provider of IT development services growing at about 20%.

Riley Exploration Permian is attempting the energy sector's first IPO since July; backed by Yorktown and Bluescape, the E&P should benefit from its position in the attractive Permian Basin.

China-based Studio City is a Macau casino raising $331 million, but insiders Melco (HK: 200) and Silver Point have agreed to take down 89% of the offering. Niu Technologies has quickly become China's largest lithium-ion e-scooter maker with 95% growth in the 1H18, though its market is becoming increasingly competitive.

The health care sector includes two rare disease biotechs: Gene editing company LogicBio and cardiopulmonary-focused PhaseBio. Medical device seller SI-BONE, which had $26 million in sales during the 1H18 (+17%), is attempting to raise $84 million to expand its sale force.

A number of deals can launch roadshows during the week ahead, including high-end cooler maker Yeti Holdings (NYSE:YETI), fashion site Revolve Group (RVLV), Chinese lending platform Samoyed Holding (SMY), Brazilian payments processor StoneCo (NASDAQ:STNE), and biotechs NGM Biopharmaceuticals (NGM), Gamida Cell (NASDAQ:GMDA) and Arog Pharmaceuticals (AROG).

U.S. IPO Calendar

Issuer
Business

Deal Size
Market Cap

Price Range
Shares Filed

Top
Bookrunners

Riley Exploration Permian (NYSE:REPX)
Oklahoma City, OK

$100M
$354M

$14 - $16
6,666,667

SunTrust
Seaport

Oil and gas E&P focused on fracking in the Permian Basin.

PhaseBio Pharmaceuticals (NASDAQ:PHAS)
Malvern, PA

$65M
$269M

$12 - $14
5,000,000

Citi
Cowen

Phase 2 biotech developing therapies for orphan diseases.

SI-BONE (NASDAQ:SIBN)
Santa Clara, CA

$84M
$335M

$13 - $15
6,000,000

Morgan Stanley
BofA ML

Provides surgical joint implants for the alleviation of lower back pain.

Studio City (NYSE:MSC)

$331M
$854M

$10.50 - $12.50
28,750,000

Deutsche Bank
Credit Suisse

Macau-based entertainment resort and casino being spun out of Melco Resorts.

Valtech (NASDAQ:VTEC)
London, United Kingdom

$100M
$678M

$14 - $16
6,666,667

JP Morgan
Morgan Stanley

Provides outsourced enterprise IT development services.

LogicBio Therapeutics (NASDAQ:LOGC)
Cambridge, MA

$75M
$294M

$12 - $14
5,770,000

Jefferies
Barclays

Preclinical gene editing biotech developing therapies for rare diseases.

Niu Technologies (NASDAQ:NIU)
Beijing, China

$95M
$899M

$10.50 - $12.50
8,300,000

Credit Suisse
Citi

China's largest producer of lithium-ion electric scooters.

SolarWinds (NYSE:SWI)
Austin, TX

$756M
$5,487M

$17 - $19
42,000,000

Goldman
JP Morgan

Provides hybrid IT infrastructure management software.

Graf Industrial (NYSE:GRAF.U)
Houston, TX

$225M
$281M

$10
22,500,000

EarlyBird
Oppenheimer

Blank check company formed by SPAC veteran James Graf to acquire an industrial business worth over $1 billion.

SolarWinds, which provides hybrid IT infrastructure management software, plans to raise $756 million by offering 42.0 million shares (60% secondary) at a price range of $17.00 to $19.00. At the midpoint of the proposed range, it would command a market value of $5.5 billion. SolarWinds, which was founded in 1999, booked $786 million in sales over the last 12 months. The Austin, TX-based company plans to list on the NYSE under the symbol SWI. Goldman Sachs, J.P. Morgan, Morgan Stanley and Credit Suisse are the joint bookrunners on the deal.

Valtech, which provides outsourced enterprise IT development services, plans to raise $100 million by offering 6.7 million shares at a price range of $14.00 to $16.00. At the midpoint of the proposed range, Valtech would command a market value of $678 million. Valtech, which was founded in 1993, booked $256 million in sales over the last 12 months. The London, United Kingdom-based company plans to list on the Nasdaq under the symbol VTEC. J.P. Morgan and Morgan Stanley are the joint bookrunners on the deal.

Riley Exploration Permian, an oil and gas E&P focused on fracking in the Permian Basin, plans to raise $100 million by offering 6.7 million shares at a price range of $14.00 to $16.00. At the midpoint of the proposed range, Riley Exploration Permian would command a market value of $354 million. Riley Exploration Permian, which was founded in 2016, booked $58 million in sales over the last 12 months. The Oklahoma City, OK-based company plans to list on the NYSE under the symbol REPX. SunTrust Robinson Humphrey, The Seaport Group and Capital One Securities are the joint bookrunners on the deal.

Studio City International Holdings, a Macau-based entertainment resort and casino being spun out of Melco International, plans to raise $331 million by offering 28.8 million ADSs at a price range of $10.50 to $12.50. Insiders Melco and Silver Point intend to purchase up to $294 million of the IPO (89% of deal). At the midpoint of the proposed range, Studio City International Holdings would command a market value of $854 million. Studio City International Holdings, which was founded in 2015, booked $568 million in sales over the last 12 months. The Hong Kong-based company plans to list on the NYSE under the symbol MSC. Deutsche Bank, Credit Suisse and Morgan Stanley are the joint bookrunners on the deal.

Niu Technologies, China's largest producer of lithium-ion electric scooters, plans to raise $95 million by offering 8.3 million ADSs at a price range of $10.50 to $12.50. Insider GGV Capital intends to purchase up to $10 million of the IPO (11% of the deal). At the midpoint of the proposed range, it would command a market value of $899 million. Niu Technologies, which was founded in 2014, booked $151 million in sales over the last 12 months. The Beijing, China-based company plans to list on the Nasdaq under the symbol NIU. Credit Suisse and Citi are the joint bookrunners on the deal.

SI-BONE, which provides surgical joint implants for the alleviation of lower back pain, plans to raise $84 million by offering 6.0 million shares at a price range of $13.00 to $15.00. Insiders intend to purchase up to $32 million of the IPO (38% of the deal). At the midpoint of the proposed range, it would command a market value of $335 million. SI-BONE, which was founded in 2008, booked $52 million in sales over the last 12 months. The Santa Clara, CA-based company plans to list on the Nasdaq under the symbol SIBN. Morgan Stanley and BofA Merrill Lynch are the joint bookrunners on the deal.

LogicBio Therapeutics, a preclinical gene editing biotech developing therapies for rare diseases, plans to raise $75 million by offering 5.8 million shares at a price range of $12.00 to $14.00. Insiders intend to purchase up to $30 million of the IPO (40% of the deal). At the midpoint of the proposed range, LogicBio Therapeutics would command a market value of $294 million. The Cambridge, MA-based company, which was founded in 2014, plans to list on the Nasdaq under the symbol LOGC. Jefferies, Barclays and William Blair are the joint bookrunners on the deal.

PhaseBio Pharmaceuticals, a Phase 2 biotech developing therapies for orphan diseases, plans to raise $65 million by offering 5.0 million shares at a price range of $12.00 to $14.00. Insiders intend to purchase up to $25 million of the IPO (38% of the deal). At the midpoint of the proposed range, it would command a market value of $269 million. The Malvern, PA-based company, which was founded in 2002, plans to list on the Nasdaq under the symbol PHAS. Citi, Cowen and Stifel are the joint bookrunners on the deal.

Graf Industrial, a blank check company formed by SPAC veteran James Graf to acquire an industrial business worth over $1 billion, plans to raise $225 million by offering 22.5 million units at a price range of $10. At that price, Graf Industrial would command a market value of $281 million. The Houston, TX-based company was founded in 2018 and plans to list on the NYSE under the symbol GRAF.U. EarlyBirdCapital and Oppenheimer & Co. are the joint bookrunners on the deal.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is down 2.5% year-to-date, while the S&P 500 is up 5.1%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Spotify (NYSE:SPOT) and Athene (NYSE:ATH). The Renaissance International IPO Index is down 13.7% year-to-date, while the ACWX is down 8.9%. Renaissance Capital's International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Samsung BioLogics and innogy.

Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.