U.S. IPO Weekly Recap: Sushi And SaaS Succeed In A 4-IPO Week

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Includes: BORR, BYND, DT, INDO, KRUS, NFINU, ORSNU, RAPT, SNDL, WIMI
by: Renaissance Capital IPO Research
Summary

Four companies and two SPACs went public this week, led by the first US-based restaurant IPO in four years.

Kura Sushi USA, which operates 22 Japanese restaurants in the US, priced its IPO at the $14 low end to raise $41 million.

Cloud software provider Dynatrace was the week's largest IPO by far, pricing well above the range to raise $570 million at a $4.8 billion market cap.

Four companies and two SPACs went public this week, led by the first US-based restaurant IPO in four years.

Kura Sushi USA (NASDAQ:KRUS), which operates 22 Japanese restaurants in the US, priced its IPO at the $14 low end to raise $41 million. This small revolving sushi bar concept has a large market opportunity, demonstrating both comp store sales growth and unit expansion. After popping 40% on its first day, it finished the week up 74%.

Cloud software provider Dynatrace (NYSE:DT) was the week's largest IPO by far, pricing well above the range to raise $570 million at a $4.8 billion market cap. Backed by Thoma Bravo, the company finished the week with a 63% return, bolstered by high subscription growth and retention, and a market that has been receptive to high-growth SaaS IPOs.

UAE-based drilling contractor Borr Drilling (NYSE:BORR) raised $47 million with its US IPO, pricing slightly below the as-converted last close of its shares on the Oslo Bors at $9.30. The year's five energy IPOs average a return of less than 1%; Borr Drilling finished the week down 4%.

Canadian cannabis producer Sundial Growers' (NASDAQ:SNDL) upsized IPO went up in smoke on its first day of trading, dropping 35%. Such sharp drops are rare. In the last 10 years, only six IPOs have fallen 30% or more on day one, four of which occurred in 2019. Despite high projected sales growth and a large market opportunity, the company is currently unprofitable, levered, and has a messy governance picture. In an interview with Bloomberg, Sundial's CEO postulated that a regulatory breach at CannTrust (OTC:CTST) is what spooked investors. The company traded up on Friday, finishing the week down 20%.

Immunology biotech RAPT Therapeutics (RAPT) postponed its $75 million IPO, while Chinese augmented reality platform WiMi Hologram Cloud (WIMI) delayed the pricing of its $34 million IPO until next week.

6 IPOs During the Week of July 29th, 2019

Issuer
Business

Deal
Size

Market Cap
at IPO

Price vs.
Midpoint

First Day
Return

Return
at 08/02

Kura Sushi USA

$41M

$115M

-7%

+40%

+74%

Operates 22 Japanese restaurants in the US featuring revolving sushi bars.

Dynatrace

$570M

$4,799M

33%

+50%

+63%

Provides a software intelligence platform for the enterprise cloud.

Netfin Acquisition (NASDAQ:NFINU)

$220M

$281M

0%

+0%

+1%

Blank check company targeting a fintech business in an emerging market.

Orisun Acquisition (NASDAQ:ORSNU)

$40M

$52M

0%

+0%

+0%

Blank check company led by an experienced Chinese investor targeting a high-tech business in the US.

Borr Drilling

$47M

$1,024M

0%

+5%

-4%

Offshore shallow-water drilling company with a global fleet of 27 rigs.

Sundial Growers

$143M

$1,686M

0%

-35%

-20%

Early-stage Canadian cannabis producer.

Only one company submitted an initial filing this week as we head into the August break: E&P Indonesia Energy (INDO) filed to raise $23 million in a US IPO.

1 Filing During the Week of July 29th, 2019

Issuer
Business

Deal
Size

Sector

Lead
Underwriter

Indonesia Energy

$23M

Energy

Maxim

Onshore Indonesian E&P that operates eight wells.

In other noteworthy news, Beyond Meat (NASDAQ:BYND), the plant-based meat substitute producer and best performing IPO of 2019 thus far, completed a follow-on offering on Wednesday, halfway through its lock-up period. The company offered 3.25 million shares, 3 million of which were from existing shareholders. Beyond Meat's stock price tumbled 25% during the week to close at $177 (+608% from IPO).

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 8/1/19, the Renaissance IPO Index was up 38.0% year-to-date, while the S&P 500 had a gain of 19.2%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Spotify (NYSE:SPOT) and Elanco (NYSE:ELAN). The Renaissance International IPO Index was up 11.3% year-to-date, while the ACWX was up 12.1%. Renaissance Capital's International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Meituan-Dianping and SoftBank.

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