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U.S. IPO Week Ahead: Beds In Boxes And A Billion-Dollar Drug Developer Featured In Diverse 7-IPO Week

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Includes: BEAM, CSPR, INMD, IPV.U, NREF, ONEW, PFHD, PPD, SDGR, ZCMD
by: Renaissance Capital IPO Research
Summary

Seven IPOs and one SPAC plan to raise $2.3 billion in the week ahead.

While Casper Sleep's IPO down round creates more buzz about unprofitable unicorns, institutional investors are quietly eyeing drug development services provider PPD, set to be the year's second billion-dollar deal.

They are joined by a life sciences tech company, a biotech, a REIT, a bank, and a boat retailer.

Seven IPOs and one SPAC plan to raise $2.3 billion in the week ahead. While Casper Sleep's (NYSE:CSPR) IPO down round creates more buzz about unprofitable unicorns, institutional investors are quietly eyeing drug development services provider PPD (NASDAQ:PPD), set to be the year's second billion-dollar deal. They are joined by a life sciences tech company, a biotech, a REIT, a bank, and a boat retailer.

Casper plans to raise $150 million at a $734 million market cap. Like many unicorns before it, the company is fast-growing and unprofitable (-19% LTM EBITDA margin), but its IPO will be a significant down-round: its $18 proposed midpoint represents a 37% adjusted discount to its last fundraising round.

Contract research organization PPD is returning to public markets, raising $1.5 billion at an $8.9 billion market cap. A play on the boom of biotechs needing research services, PPD is a leader in the CRO space, and its peers have been trading well. PPD was LBO'd by Hellman & Friedman and Carlyle in 2011 and plans to use IPO proceeds to pay down debt, but it will remain highly levered post-IPO (5.1x net debt/LTM EBITDA). PPD has gathered interest, but billion-dollar IPOs have only popped 12% on average in the last five years.

Schrödinger (NASDAQ:SDGR), which provides a software platform for life sciences and materials research, plans to raise $150 million at a $950 million market cap. In 2018, all of the top 20 pharmas by revenue used its solutions, and it had 122 customers with an annual contract value greater than $100,000. However, its gross margin declined and its EBITDA loss widened in the 9mo19.

Preclinical gene editing biotech Beam Therapeutics (NASDAQ:BEAM) plans to raise $100 million at a $686 million market cap. The company's base editing technology is being used to develop therapies for multiple indications (e.g. sickle cell, leukemia) across multiple delivery pipelines, and it expects to begin a wave of IND filings in 2021.

Newly-formed mortgage REIT NexPoint Real Estate Finance (NYSE:NREF) plans to raise $100 million at a $353 million market cap. While the company has no operating history, external manager NexPoint Advisors' NexPoint Residential Trust (NYSE: NXRT) has outperformed since its 2015 listing.

Professional Holding Corp. (NASDAQ:PFHD), a community bank in South Florida, plans to raise $62 million at a $253 million market cap. After the offering and the pending acquisition of Marquis Bancorp, the bank will have $1.7 billion in total assets, $1.4 billion in total deposits, $1.3 billion in total loans, and $219 million in total stockholders' equity.

Recreational boat retailer OneWater Marine (NASDAQ:ONEW) plans to raise $60 million at a $180 million market cap. Backed by Goldman, OneWater Marine has made 17 acquisitions since its 2014 formation. The company originally planned to raise $60 million at a $181 million market cap but postponed in October 2019. Since then, OneWater has reported earnings, and its boating peers have outperformed.

InterPrivate Acquisition (IPV.U), a blank check company led by the founder of private equity firm InterPrivate, plans to raise $175 million at a $226 million market cap. Additionally, Chinese healthcare website Zhongchao (NASDAQ:ZCMD) could go public in the week ahead, raising $15 million at a $107 million market cap.

On Tuesday, February 4, InMode's (NASDAQ:INMD) lock-up period will be expiring.

U.S. IPO Calendar

Issuer
Business

Deal Size
Market Cap

Price Range
Shares Filed

Top
Bookrunners

Beam Therapeutics
Cambridge, MA

$100M
$724M

$15 - $17
6,250,000

JP Morgan
Jefferies

Preclinical biotech developing therapies based on single-base gene editing.

Casper
New York, NY

$150M
$734M

$17 - $19
8,350,000

Morgan Stanley
Goldman

Direct-to-consumer mattress and bedding brand.

PPD
Wilmington, NC

$1,530M
$8,884M

$24 - $27
60,000,000

Barclays
JP Morgan

LBO'd contract research organization that provides drug development services.

Schrödinger
New York, NY

$150M
$950M

$14 - $16
10,000,000

Morgan Stanley
BofA

Provides a software platform for life sciences and materials research.

NexPoint R.E. Finance
Dallas, TX

$100M
$353M

$19 - $21
5,000,000

Raymond James
KBW

Newly-formed mortgage REIT focused on single- and multi-family commercial debt.

OneWater Marine
Buford, GA

$60M
$180M

$12 - $14
4,615,385

Raymond James
Baird

Recreational boat dealership that owns and operates 63 stores in the US.

Professional Holding Corp.
Coral Gables, FL

$62M
$253M

$19 - $21
3,100,000

Stephens
KBW

Florida bank with nine locations across the Miami-Dade MSA.

InterPrivate Acquisition
New York, NY

$175M
$226M

$10
17,500,000

EarlyBird

Blank check company led by the founder of private equity firm InterPrivate.

Zhongchao
Shanghai, China

$15M
$107M

$4 - $4.50
3,500,000

Network 1

Chinese internet platform providing medical information, education, and training.

The following IPOs are expected to price this week:

Beam Therapeutics, a preclinical biotech developing therapies based on single-base gene editing, plans to raise $100 million by offering 6.3 million shares at a price range of $15.00 to $17.00. At the midpoint of the proposed range, Beam Therapeutics would command a market value of $686 million. Beam Therapeutics was founded in 2017. The Cambridge, MA-based company plans to list on the Nasdaq under the symbol BEAM. J.P. Morgan, Jefferies, and Barclays are the joint bookrunners on the deal.

Casper Sleep, a direct-to-consumer mattress and bedding brand, plans to raise $150 million by offering 8.4 million shares at a price range of $17.00 to $19.00. At the midpoint of the proposed range, Casper Sleep would command a market value of $734 million. Casper Sleep, which was founded in 2013, booked $411 million in sales over the last 12 months. The New York, NY-based company plans to list on the NYSE under the symbol CSPR. Morgan Stanley, Goldman Sachs, Jefferies, and five others are the joint bookrunners on the deal.

InterPrivate Acquisition, a blank check company led by the founder of private equity firm InterPrivate, plans to raise $175 million by offering 17.5 million units at $10.00 to command a market value of $226 million. InterPrivate Acquisition was founded in 2019. The New York, NY-based company plans to list on the NYSE under the symbol IPV.U. EarlyBirdCapital is the sole bookrunner on the deal.

NexPoint Real Estate Finance, a newly-formed mortgage REIT focused on single- and multi-family commercial debt, plans to raise $100 million by offering 5.0 million shares at a price range of $19.00 to $21.00. At the midpoint of the proposed range, NexPoint Real Estate Finance would command a market value of $353 million. NexPoint Real Estate Finance, which was founded in 2019, booked $34 million in revenue over the last 12 months. The Dallas, TX-based company plans to list on the NYSE under the symbol NREF. Raymond James, Keefe Bruyette Woods, and Baird are the joint bookrunners on the deal.

OneWater Marine, a recreational boat dealership that owns and operates 63 stores in the US, plans to raise $60 million by offering 4.6 million shares at a price range of $12.00 to $14.00. At the midpoint of the proposed range, OneWater Marine would command a market value of $180 million. OneWater Marine, which was founded in 2014, booked $768 million in sales over the last 12 months. The Buford, GA-based company plans to list on the Nasdaq under the symbol ONEW. Raymond James, Baird, and SunTrust Robinson Humphrey are the joint bookrunners on the deal.

PPD, an LBO'd contract research organization that provides drug development services, plans to raise $1.5 billion by offering 60.0 million shares at a price range of $24.00 to $27.00. At the midpoint of the proposed range, PPD would command a market value of $8.9 billion. PPD, which was founded in 1985, booked $4.0 billion in revenue over the last 12 months. The Wilmington, NC-based company plans to list on the Nasdaq under the symbol PPD. Barclays, J.P. Morgan, Morgan Stanley, and nine others are the joint bookrunners on the deal.

Professional Holding Corp., a Florida bank with nine locations across the Miami-Dade MSA, plans to raise $62 million by offering 3.1 million shares at a price range of $19.00 to $21.00. At the midpoint of the proposed range, Professional Holding Corp would command a market value of $253 million. Professional Holding Corp, which was founded in 2008, booked $30 million in revenue over the last 12 months. The Coral Gables, FL-based company plans to list on the Nasdaq under the symbol PFHD. Stephens Inc. and Keefe Bruyette Woods are the joint bookrunners on the deal.

Schrödinger, which provides a software platform for life sciences and materials research, plans to raise $150 million by offering 10.0 million shares at a price range of $14.00 to $16.00. At the midpoint of the proposed range, Schrödinger would command a market value of $950 million. Schrödinger, which was founded in 1990, booked $77 million in revenue over the last 12 months. The New York, NY-based company plans to list on the Nasdaq under the symbol SDGR. Morgan Stanley, BofA Securities, Jefferies, and BMO Capital Markets are the joint bookrunners on the deal.

Zhongchao, a Chinese internet platform providing medical information, education, and training, plans to raise $15 million by offering 3.5 million shares at a price range of $4.00 to $4.50. At the midpoint of the proposed range, Zhongchao would command a market value of $107 million. Zhongchao, which was founded in 2012, booked $15 million in revenue over the last 12 months. The Shanghai, China-based company plans to list on the Nasdaq under the symbol ZCMD. Network 1 Financial Securities is the sole bookrunner on the deal.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 1/30/20, the Renaissance IPO Index was up 6.9% year-to-date, while the S&P 500 had a gain of 1.6%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Uber (NYSE:UBER) and Spotify (NYSE:SPOT). The Renaissance International IPO Index was up 0.8% year-to-date, while the ACWX was down 1.8%. Renaissance Capital's International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Adyen and SoftBank.

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