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U.S. IPO Weekly Recap: More Deals Price Down In A 3-IPO Week

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Includes: ANPC, CAN, DNK, DUO, EH, FSRVU, LIZI, ML, OYST, RAPT, SFTW.U, SPCE
by: Renaissance Capital IPO Research
Summary

Two biotechs and a Chinese real estate company entered the public market, accompanied by two SPACs.

All three companies priced at the bottom of the range, while both SPACs upsized their unit offerings.

Seven Chinese companies filed for US IPOs, along with two SPACs that submitted initial filings.

Two biotechs and a Chinese real estate company entered the public market, accompanied by two SPACs. All three companies priced at the bottom of the range, while both SPACs upsized their unit offerings. Seven Chinese companies filed for US IPOs, along with two SPACs that submitted initial filings.

Chinese real estate platform Fangdd Network Group (NASDAQ:DUO) downsized its ADS offering to raise $78 million (25% insider) at a $1.1 billion market cap. The company has demonstrated profitability and accelerating growth in 1H19, but high payouts to third-party agents have weighed on its gross margin, which has hovered at 21%. While it didn't perform as poorly as recent Chinese IPOs, Fangdd did break issue intraday, but finished flat at its IPO price.

Oyster Point Pharma (NASDAQ:OYST), a Phase 3 biotech developing a nasal spray formulation for dry eye disease, raised $80 million at a $363 million market cap. Phase 1 immunology biotech RAPT Therapeutics (NASDAQ:RAPT) raised $36 million, 44% from insiders, at a $262 million market cap. The company revived its IPO plans after postponing its $75 million deal in August.

The two SPACs that went public this week upsized their unit offerings. Edward and Jonathan Cohen's second SPAC Osprey Technology Acquisition (SFTW.U) raised $275 million to acquire a tech business, and fintech SPAC FinServ Acquisition (NASDAQ:FSRVU) raised $220 million.

In other news, Virgin Galactic (NYSE:SPCE), the first publicly listed human-spaceflight company, began trading under its new name and ticker following its merger with publicly-traded SPAC Social Capital Hedosophia, which IPO'd in 2017. The company's shares finished the week 4% below the $10 benchmark.

In non-US IPO news, nearly four years after disclosing intentions to go public, Saudi Aramco is expected to launch its IPO on November 3. Saudi's crown prince is seeking to value the company at $2.0 trillion in what could be the world's largest IPO.

5 IPOs During the Week of October 28th, 2019

Issuer
Business

Deal
Size

Market Cap
at IPO

Price vs.
Midpoint

First Day
Return

Return
at 11/01

Oyster Point Pharma

$80M

$363M

-6%

+17%

+12%

Phase 3 biotech developing a nasal spray formulation for dry eye disease.

RAPT Therapeutics

$36M

$262M

-20%

+8%

+6%

Phase 1 biotech developing therapies for cancer and inflammatory diseases.

FinServ Acquisition

$220M

$276M

0%

+1%

+1%

Blank check company targeting the fintech industry led by finance veterans.

Fangdd Network Group

$78M

$1,087M

-7%

+0%

+0%

Chinese online real estate marketplace.

Osprey Technology Acq.

$275M

$338M

0%

n/a

+0%

Second blank check company led by Edward and Jonathan Cohen targeting the tech industry.

Despite poor recent performances from Chinese issuers, seven have filed for US IPOs. Canaan (CAN), a leading maker of cryptocurrency mining equipment, filed to raise $400 million. Apartment sub-leaser Phoenix Tree Holdings (DNK), operating under the name Danke Apartment, filed for an estimated $300 million US IPO.

Podcast platform LIZHI (LIZI), Phase 3 immunotherapy biotech I-Mab Biopharma (IMAB), used car financer Meili Auto Holdings (ML), and drone maker EHang Holdings (EH) all filed to raise $100 million. AnPac Bio-Medical Science (ANPC), which provides multi-cancer screening tests, filed to raise $22 million.

9 Filings During the Week of October 28th, 2019

Issuer
Business

Deal
Size

Sector

Lead
Underwriter

Alussa Energy Acquisition (ALUSU)

$225M

SPAC

BTIG

Blank check company targeting the energy sector.

AnPac Bio-Medical Science

$22M

Healthcare

WestPark Capital

Chinese provider of multi-cancer screening tests.

CHP Merger Corp. (CHPMU)

$250M

SPAC

JPMorgan

Blank check company led by a team from Concord Health Partners targeting the healthcare industry.

EHang

$100M

Consumer Discretionary

Morgan Stanley

Chinese developer of drones for recreational and commercial uses.

Meili Auto Holdings

$100M

Financials

UBS

Facilitates used car loans for prime borrowers in China.

I-Mab Biopharma

$100M

Healthcare

Jefferies

Phase 3 biotech developing antibodies for cancer and autoimmune diseases.

Canaan

$400M

Technology

Credit Suisse

Leading maker of cryptocurrency mining equipment.

LIZHI

$100M

Technology

Credit Suisse

Chinese interactive podcast platform.

Phoenix Tree Holdings

$300M

Real Estate

Citi

Renovates and sub-leases apartments in Chinese cities.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 10/31/19, the Renaissance IPO Index was up 27.7% year-to-date, while the S&P 500 had a gain of 21.2%. Renaissance Capital's IPO ETF (NYSEARCA:IPO) tracks the index, and top ETF holdings include Spotify (NYSE:SPOT) and Roku (NASDAQ:ROKU). The Renaissance International IPO Index was up 18.5% year-to-date, while the ACWX was up 15.1%. Renaissance Capital's International IPO ETF (NYSEARCA:IPOS) tracks the index, and top ETF holdings include Meituan-Dianping (MEIT) and SoftBank (OTCPK:SFTBY).

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