U.S. IPO Week Ahead: Millennial Fashion Seller Revolve Set To IPO

|
Includes: GIX.U, GSX, RVLV
by: Renaissance Capital IPO Research
Summary

Revolve Group, which plans to raise $200 million (75% insider), has scaled to a $500 million per year online fashion seller by targeting millennials and Gen Z customers through thousands of social media influencers and live events like Coachella.

GSX Techedu is a profitable online tutoring company with explosive growth (>450% in the MRQ).

Led by Avi Katz, GigCapital2 aims to raise $130 million this week.

Two IPOs each plan to raise about $200 million in the coming week. One is a California-based online fashion retailer and the other is a China-based online tutoring provider. A blank check company is also on deck.

Revolve Group (NYSE:RVLV), which plans to raise $200 million (75% insider), has scaled to a $500 million per year online fashion seller by targeting millennials and Gen Z customers through thousands of social media influencers and live events like Coachella. The profitable company is growing sales at more than 20%. It targets a market cap of about $1.2 billion.

GSX Techedu (NYSE:GSX) is a profitable online tutoring company with explosive growth (>450% in the MRQ). However, Chinese stocks have recently traded off, while Chinese education stocks have been under pressure for over a year. A number of them IPO'd in the US in late 2017 and early 2018 (RYB, REDU, FEDU, STG, ONE, NEW), all of which now trade below issue. The company booked $90 million in revenue during the LTM period, and is targeting a $2.6 billion market cap.

Led by Avi Katz, GigCapital2 (GIX.U) aims to raise $130 million this week. Earlier this year, his first SPAC GigCapital (NYSE:GIG) announced that it would acquire cloud communications software provider Kaleyra.

U.S. IPO Calendar

Issuer
Business

Deal Size
Market Cap

Price Range
Shares Filed

Top
Bookrunners

GSX Techedu
Beijing, China

$208M
$2,638M

$9.50 - $11.50
19,800,000

Credit Suisse
Deutsche Bank

Provides K-12 online after-school tutoring in China.

Revolve Group
Cerritos, CA

$200M
$1,219M

$16 - $18
11,764,706

Morgan Stanley
Credit Suisse

Online women's fashion retailer with over 500 brands.

GigCapital2
Palo Alto, CA

$130M
$168M

$10
13,000,000

EarlyBird
Northland

Blank check company formed by semiconductor veteran Avi Katz to acquire a TMT business.

GSX Techedu, which provides K-12 online after-school tutoring in China, plans to raise $208 million by offering 19.8 million ADSs at a price range of $9.50 to $11.50. At the midpoint of the proposed range, it would command a market value of $2.6 billion. GSX Techedu, which was founded in 2014, booked $90 million in sales over the last 12 months. The Beijing, China-based company plans to list on the NYSE under the symbol GSX. Credit Suisse, Deutsche Bank, Barclays and CITIC CLSA are the joint bookrunners on the deal.

Revolve Group, an online women's fashion retailer with over 500 brands, plans to raise $200 million by offering 11.8 million shares at a price range of $16.00 to $18.00. At the midpoint of the proposed range, it would command a market value of $1.2 billion. Revolve Group, which was founded in 2003, booked $523 million in sales over the last 12 months. The Cerritos, CA-based company plans to list on the NYSE under the symbol RVLV. Morgan Stanley, Credit Suisse, BofA Merrill Lynch, Barclays and Jefferies are the joint bookrunners on the deal.

GigCapital2, a blank check company formed by semiconductor veteran Avi Katz to acquire a TMT business, plans to raise $130 million by offering 13.0 million units at a price of $10.00. At that price, GigCapital2 would command a market value of $168 million. The Palo Alto, CA-based SPAC was founded in 2019 and plans to list on the NYSE under the symbol GIX.U. EarlyBirdCapital and Northland Securities are the joint bookrunners on the deal.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 5/30/19, the Renaissance IPO Index was up 29.5% year-to-date, while the S&P 500 had a gain of 12.2%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Elanco (NYSE:ELAN) and Okta (NASDAQ:OKTA). The Renaissance International IPO Index was up 9.1% year-to-date, while the ACWX was up 7.7%. Renaissance Capital's International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include SoftBank and Xiaomi.

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editor.