U.S. IPO Weekly Recap: Small Deals Defy The Typical August Lull In A 4 IPO Week

Aug. 13, 2022 12:55 AM ETLUXH, EMCGU, FRZA, GCT, HMACU, LRE-OLD, LUCY, LUCYW, PXMD, REBN, TGL, VEEE1 Comment

Summary

  • While IPO activity typically takes a break in August, 2022 continues to throw curveballs. Four small deals priced this past week, joined by two SPACs. Two small IPOs and one SPAC submitted initial filings.
  • Malaysian e-payment app Treasure Global priced at the low end to raise $8 million at a $65 million market cap.
  • After an active week by 2022 standards, just 2 IPOs are scheduled to price in the third week of August. However, if the current market rally continues, we may see an increase in filing activity following Labor Day.

Initial public offering hologram, night panoramic city view of Bangkok. The financial center for multinational corporations in Asia. The concept of boosting the growth by IPO process. Double exposure.

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While IPO activity typically takes a break in August, 2022 continues to throw curveballs. Four small deals priced this past week, joined by two SPACs. Two small IPOs and one SPAC submitted initial filings.

Malaysian e-payment app Treasure Global (TGL) priced at the low end to raise $8 million at a $65 million market cap. The company’s ZCITY App offers consumers and merchants instant rebates and affiliate cashback programs, along with an e-payment solution. Treasure Global soared 346% on its first day but deflated in the aftermarket, still finishing up 110%.

Electric boat developer Forza X1 (FRZA) raised $15 million at a $50 million market cap. Spun out of Twin Vee PowerCats (VEEE), the company aims to manufacture and sell affordable electric boats for recreational sport use. While it has only worked on prototypes to date, Forza X1 expects to start producing and selling their initial FX1 dual console and FX1 center console models in 2Q23. Forza X1 finished up 50%.

California coffee roaster Reborn Coffee (REBN) upsized to raise $7 million at a $65 million market cap. The company serves specialty-roasted coffee at retail locations, kiosks, and cafes, as well as at its own company-owned stores. While Reborn is highly unprofitable and competes with significantly larger players, average unit volume at its retail locations increased 41% in 2021. Reborn Coffee finished down 4%.

Short-term rental provider CorpHousing Group (CHG) downsized and priced at the low end to raise $14 million at a $107 million market cap. Operating under its consumer brands, SoBeNY and LuxUrban, the company has 619 accommodation units in seven cities in the US. Profitable and fast-growing, it plans to launch international operations in 2022, starting with London or Paris. CorpHousing finished down 8%.

Two SPACs also priced during the week: Embrace Change Acquisition (EMCGU) raised $65 million to target tech and consumer, and growth-focused Hainan Manaslu Acquisition (HMACU) raised $60 million.

6 IPOs During the Week of August 8th, 2022

Issuer

Business

Deal

Size

Market

Cap

at IPO

Price vs.

Midpoint

First

Day

Return

Return

at

08/12

Treasure Global (TGL) $8M $65M -20% +346% +110%
Provides an e-payment app in Malaysia that offers instant rebates.
Forza X1 (FRZA) $15M $50M 0% +50% +50%
Fully electric boat developer being spun out of Twin Vee PowerCats.
Embrace Change Acq. (EMCGU) $65M $85M 0% +0% +0%
Blank check company targeting the technology, internet, and consumer sectors.
Hainan Manaslu Acq. (HMACU) $60M $78M 0% +0% +0%
Blank check company targeting businesses in high growth industries.
Reborn Coffee (REBN) $7M $65M 0% -4% -4%
Premium coffee roaster with nine cafe stores in California.
CorpHousing Group (CHG) $14M $107M -43% -8% -8%
Provides short-term rentals for travelers in major US cities.
3 Filings During the Week of August 8th, 2022

Issuer

Business

Deal

Size

Sector

Lead

Underwriter

Lead Real Estate (LRE) $27M Real Estate Network 1
Luxury residential property developer in Japan.
Tower One (TO) $14M Communication Services Maxim
Owns and operates mobile network towers in the Americas.
BCGF Acquisition (BCGFU) $87M SPAC EF Hutton
Blank check company targeting the biotechnology industry.

Week Ahead

After an active week by 2022 standards, just 2 IPOs are scheduled to price in the third week of August. However, if the current market rally continues, we may see an increase in filing activity following Labor Day.

GigaCloud Technology (GCT) plans to raise $28 million at a $447 million market cap. The company offers an online B2B marketplace for large parcel merchandise, including furniture, home appliances, and fitness equipment.

Its global marketplace connects manufacturers, primarily in Asia, with resellers, primarily in the US, Asia, and Europe. Although Revenue grew 19% in 1Q22, the company has since been confronted by several supply chain issues such as increasing fuel costs and shipping delays due to COVID-19 lockdowns in Shanghai.

Phase 2 Biotech PaxMedica (PXMD) plans to raise $8 million at an $80 million market cap. Initially filing for an IPO in July 2020, the company has since cut its original deal size in half as it seeks to develop therapies for neurodevelopmental disorders. In February 2021, PaxMedica announced positive topline data from its Phase 2 dose-ranging trial for the treatment of the core symptoms of autism spectrum disorder (ASD).

Other small deals may price offerings as well, such as Innovative Eyewear (LUCY).

U.S. IPO Calendar

Issuer

Business

Deal Size

Market Cap

Price Range

Shares Filed

Top

Bookrunners

GigaCloud Technology (GCT)

Hong Kong, China

$28M

$447M

$10.25-$12.25

2,450,000

Aegis Cap.
Operates a wholesale marketplace for furniture and other bulky goods made in Asia.

PaxMedica (PXMD)

Woodcliff Lake, NJ

$8M

$80M

$4.50-$6.50

1,545,454

Craft Cap. Mgmt.

R. F. Lafferty

Phase 2 biotech developing therapies for neurodevelopmental disorders.

Street research is expected for two companies, and lock-up periods will be expiring for up to one company in the week ahead.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 8/11/2022, the Renaissance IPO Index was down 37.9% year-to-date, while the S&P 500 was down 10.9%.

Renaissance Capital's IPO ETF (IPO) tracks the index, and top ETF holdings include Airbnb (ABNB) and Snowflake (SNOW). The Renaissance International IPO Index was down 29.6% year-to-date, while the ACWX was down 13.7%. Renaissance Capital’s International IPO ETF (IPOS) tracks the index, and top ETF holdings include Kuaishou (OTCPK:KUASF) and EQT.

Original Post

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

This article was written by

Renaissance Capital provides pre-IPO research to institutional investors and investment banks. The Firm manages two IPO-focused funds: The Renaissance IPO ETF (NYSE: IPO) and the Renaissance International IPO ETF (NYSE: IPOS). Individual investors can get a free overview of the IPO market on www.renaissancecapital.com, and try a free trial of our premium platform, IPO Pro (ipopro.renaissancecapital.com). Through Renaissance Capital’s pre-IPO research service, institutional investors get an independent opinion, in-depth fundamental analysis, and customizable financial models on all IPOs.

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