As the overall broader markets corrected themselves for a 4% pullback for the week, 2018 has still been a stellar year for equities. Coming into the week the S&P 500 index was pushing through 11% gains for the year, and almost 40% since the most recent US elections. As the political backdrop begins to take a stronger hold with mid-term elections less than 3 weeks away, the capital markets are on pace to raise a record setting amount of real dollars. More companies are bringing their businesses to the public markets, and more institutional investors are buying in on the equity. Yields on the 10-year treasury closed the week just over 3.16%, pulling back from the 7 year high yield of 3.25%. The $VIX, the markets' barometer for market volatility closed the week at 21.31, off of Thursday's intra-day high which traded over 26$/share.
The pick-up in volatility, coupled with the weekly pullback in equities has affected near-term demand in the capital markets. Last week we highlighted 3 potentially hot deals. $ALLO, $LTHM, and $PLAN. Two of them lived up to expectations, while the other did not ultimately garner the anticipated demand.
$PLAN Anaplan, Inc. the organizational planning software company, rung its opening trade at $24.25 off of a 17$ pricing and closed the week at $24.30 for a better than 42% return for investors.
$ALLO Allogene Therapeutics, Inc. representing clinical stage immuno-oncology, opened trading at $22 from an $18 pricing and closed the week at $26.81, almost a 50% increase from it's IPO price.
$LTHM Livent Corporation, priced 20m shares at $17, opened its first day of trading at $16.25 and ultimately closed the week at the same price of $16.25. A slight discount to it's IPO price, but a bit of a disappointment from the buzz surrounding the deal just 7 days prior.
The syndicate calendar for the upcoming week has undoubtedly been affected by the overall market indicators which we referenced earlier. While the buzz and book-building has been quite tepid across the board, there are still large deals coming to the equity markets that can provide opportunities for investors. One deal to note, mainly due to it's sheer size of almost $900 million at the high end of the current range, is SolarWinds Corporation, $SWI.
$SWI is scheduled to bring 42m shares at a current range of $17-$19. With a surfeit of underwriters participating in the deal, SolarWinds is looking to buck the recent tech sell-off. A leading provider of IT infrastructure management software, this Austin, TX based company has raised $5.5b in both debt and equity to date, privately. Assuming they exercise their option, the two largest selling shareholders of the Goldman Sachs led IPO, will be private equity giants, Silver Lake Partners and Thoma Bravo.
Another company to note is the Macau based casino resort, Studio City Intl Holdings $MSC. Offering 28.75m shares (10.5-12.5) and led by Deutsche Bank, Credit Suisse and Morgan Stanley, Studio City will try to overcome a very heavy debt-load of $2b, in a space typically ridden with debt, and put together a deal that will attract legitimate institutional fanfare.
A potential sleeper for the week is the UK based software and marketing company, Valtech SE $VTEC. While sitting with ~$60m in cash as of this summer, and just under $300m of total assets, the company is currently losing ~(.05)/share. It will try to overcome its current state of unprofitability, by seeing a pickup in its current 15% yoy revenue growth. JP Morgan and Morgan Stanley, will lead to bring 6.5m shares at $14-$16 range.
Rounding out the rest of the expected new offerings are:
$LOGC LogicBio Therapeutics 5.7m shares (12-14) Jefferies, Barclays, and William Blair
$NIU Niu Technologies 8.3m shares (10.5-12.5) Credit Suisse, Citigroup
$PHAS PhaseBio 5m shares (12-14) Citigroup, Cowen, Stifel
$SIBN Si-Bone 6m shares (13-15) Morgan Stanley, BofA Merrill
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