Eleven IPOs and nine SPACs priced this past week, getting out ahead of the US election. Markets tumbled and volatility spiked, as several deals broke issue and three IPOs postponed. The diverse group had very mixed trading, and averaged a return of 9.9%. New filings kept steady with six IPOs and five SPACs (which continue to face pushback).

Chinese financial services platform Lufax (NYSE:LU) priced at the high end to raise $2.4 billion at a $33 billion market cap, the year’s second-largest IPO. Spun out of Chinese insurer Ping An, Lufax provides a loan facilitation and wealth management platform. Despite a highly regulated market in China, the company has maintained steady growth with solid earnings. That said, it priced at a premium valuation in a space littered with failures, and the stock traded off -4.8%.

Fast-growing auto insurer Root (NASDAQ:ROOT) upsized and priced above the range to raise $724 million at a $7 billion market cap. The “insurtech” company provides a mobile app with proprietary telematics-based scoring technology allowing for individualized insurance pricing. The insurer has paid heavily for its exponential growth, netting a loss of $330 million on revenue of $432 million. Root finished down 11%.

Pool supplies retailer Leslie’s (NASDAQ:LESL) priced above range to raise $680 million at a $3.2 billion market cap. Returning to the market after being taken private over two decades ago, L Catterton-backed Leslie’s is a leading US provider of pool supplies and services. Benefiting from the recent pick-up in home improvement projects, the company has a stable business model with recurring revenue and a straightforward expansion story. Leslie’s finished up 29%.

Fabless chip producer Allegro MicroSystems (NASDAQ:ALGM) priced at the high end to raise $350 million at a $2.7 billion market cap. A subsidiary of Sanken Electric, Allegro Microsystems designs magnetic sensor and power ICs for the auto and industrial sectors. Despite volatile historical results due to the cyclical nature of the semiconductor industry, the company has demonstrated an ability to generate profits across cycles. Allegro MicroSystems finished up 31%.

Atea Pharmaceuticals (NASDAQ:AVIR) upsized and priced at the high end to raise $300 million at a $2 billion market cap. This biotech is developing an oral therapy for COVID-19 through the inhibition of the RNA polymerase that allows the virus to replicate. Atea’s lead candidate has demonstrated safety and showed activity against SARS-CoV-2 in preclinical work. Atea Pharmaceuticals finished up 26%.

Insurance ad-tech MediaAlpha (NYSE:MAX) priced at the midpoint to raise $176 million at a $1.2 billion market cap. This B2B technology platform helps insurance carriers to acquire customers in digital channels more effectively by offering real-time targeting. While its ad-buying model has low gross margins, the company has grown rapidly and profitable since its inception. MediaAlpha finished up 78%.

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Phase 2 biotech Galecto (NASDAQ:GLTO) priced midrange to raise $85 million at a $395 million market cap. Galecto develops therapeutics that target biological processes associated with fibrosis and related fibrotic diseases. Galecto finished down 5%.

Diagnostics provider Biodesix (NASDAQ:BDSX) priced midrange to raise $72 million at a $518 million market cap. Biodesix provides diagnostic solutions for lung disease and other clinical unmet needs through a proprietary AI platform. Revenue fell 24% in the first half, and unlike most early-stage IPOs, the company did not have traditional VC backers. Biodesix finished down 31%.

Phase 1 biotech SQZ Biotechnologies (NYSE:SQZ) priced at the bottom of the range to raise $71 million at a $422 million market cap. SQZ Biotechnologies develops cell therapies for cancer and infectious diseases through its proprietary Cell Squeeze technology. The company’s lead candidate is in Phase 1 trial and should see data in the 1H21. SQZ Biotechnologies finished down 17%.

Listed on the TSX, silver producer Gatos Silver (NYSE:GATO) priced a US IPO at the low end to raise $150 million at a $397 million market cap. Gatos Silver is developing silver and zinc mining operations in Chihuahua, Mexico. Gatos Silver finished down 4%.

SaaS provider Absolute Software (ABST) priced below its last close on the TSX to raise $60 million in its US IPO, at a $559 million market cap. The company partners with computer OEMs to install security firmware that can later be activated on a subscription basis. Absolute Software finished up 3%.

Three IPOs postponed this past week. These included two mortgage lenders, Apollo-backed AmeriHome (AHM) and Lone Star-backed Caliber Home Loans (HOMS), which delayed their 100% secondary offerings amid lackluster demand in the space. In addition, cloud-native software applications provider Mavenir (NASDAQ:MVNR) withdrew its IPO on Friday after postponing earlier in the week.

Nine SPACs raised $2.2 billion this past week. The pack was led by Daniel Och and Glenn Fuhrman’s Ajax I (AJAX.U) and wireless communications-focused CONX (NASDAQ:CONXU), each raising $750 million. Energy and industrials SPAC Bluescape Opportunities Acquisition (BOACU) raised $575 million. Moelis & Company’s Atlas Crest Investment (ACICU) raised $500 million. Healthtech focused SPAC Lux Health Tech Acquisition (NASDAQ:LUXAU) raised $300 million. Maso Capital’s Duddell Street Acquisition (NASDAQ:DSACU) raised $175 million. Mallard Capital’s industrials SPAC Mallard Acquisition (MACUU) raised $110 million. Formed by Crescent Heights’ Russell Galbut, New Beginnings Acquisition (NBA.U) raised $100 million. Sports, entertainment and brand-focused SPAC Bull Horn Holdings (BHSEU) raised $75 million.

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20 IPOs During the Week of October 26th, 2020

Issuer
Business

Deal
Size

Market Cap
at IPO

Price vs.
Midpoint

First Day
Return

Return
at 10/30

MediaAlpha

$176M

$1,208M

0%

+68%

+78%

Provides an automated digital ad buying platform for the insurance industry.

Allegro MicroSystems

$350M

$2,652M

8%

+26%

+31%

Fabless chip producer for auto and industrial markets being spun out of Sanken.

Leslie’s

$680M

$3,172M

13%

+28%

+29%

Leading US provider of pool supplies and services with over 930 retail locations.

Atea Pharmaceuticals

$300M

$2,080M

4%

+26%

+26%

Phase 2 biotech developing therapies for COVID-19 and other viral diseases.

Absolute Software

$60M

$559M

0%

+10%

+3%

Provides a cloud-based device management and security platform.

Lux Health Tech Acq.

$300M

$375M

0%

+0%

+2%

Blank check company formed by Lux Capital targeting a healthtech business.

Ajax I

$750M

$833M

0%

+2%

+1%

Blank check company formed by Och-Ziff’s Daniel Och and MSD Capital’s Glenn Fuhrman.

New Beginnings Acq.

$100M

$130M

0%

n/a

+0%

Blank check company formed by the co-founder of Crescent Heights and an executive from Alliant Insurance Services.

Galecto

$85M

$395M

0%

+0%

+0%

Phase 2 biotech developing therapeutics for fibrosis and related diseases.

Mallard Acquisition

$110M

$138M

0%

-1%

-1%

Blank check company formed by Mallard Capital targeting an industrials business.

Atlas Crest Investment

$500M

$625M

0%

+0%

-1%

Blank check company formed by Moelis & Company.

CONX

$750M

$938M

0%

-1%

-1%

Blank check company formed by Charles Ergen targeting wireless communications.

Bull Horn Holdings

$75M

$94M

0%

-1%

-1%

Blank check company targeting leading sports, entertainment, and brand companies.

Bluescape Opp. Acq.

$575M

$719M

0%

-2%

-1%

Blank check company formed by Bluescape Energy Partners targeting the energy and industrial sectors.

Duddell Street Acq.

$175M

$219M

0%

-2%

-2%

Blank check company formed by Maso Capital targeting global growth companies.

Gatos Silver

$150M

$397M

-13%

-6%

-4%

US producer of silver and other precious metals.

Lufax

$2,363M

$32,931M

8%

-5%

-5%

Provides a platform for retail loan facilitation and wealth management in China.

Root

$724M

$7,052M

15%

+0%

-11%

Provides auto insurance using mobile-based telematics technology.

SQZ Biotechnologies

$71M

$422M

-6%

-17%

-17%

Phase 1 biotech developing cell therapies for solid tumors and other indications.

Biodesix

$72M

$518M

0%

-29%

-31%

Provides diagnostic tests and services for lung disease and other unmet needs.

Six IPOs and six SPACs submitted initial filings this past week. Biotech supplier Maravai LifeSciences (MRVI), breast cancer biotech Olema Pharmaceuticals (OLMA), and cosmetics producer Yatsen (YSG) each filed to raise $100 million. Gaming technology provider NeoGames (NGMS) filed to raise $90 million. E-bicycle producer EZGO Technologies (EZGO) filed to raise $11 million. Software-defined radio system Ondas (OTCQB:ONDS) re-filed to raise $25 million.

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Healthcare technology SPAC Health Assurance Acquisition (HAAC.U) filed to raise $500 million. Consumer-focused SPAC Leo Holdings II (LHII.RC) and Omnichannel and retail SPAC Omnichannel Acquisition (OCA.U) both filed to raise $350 million. Periphas Capital’s Periphas Capital Partnering Corp. (PCPC.U) filed to raise $300 million. Therapeutics-focused SPAC Population Health Investment (PHICU) filed to raise $150 million. Oil and natural gas SPAC Breeze Holdings Acquisition (BREZU) filed to raise $100 million.

12 Filings During the Week of October 26th, 2020

Issuer
Business

Deal
Size

Sector

Lead
Underwriter

Olema Pharmaceuticals

$100M

Health Care

JP Morgan

Clinical-stage biotech developing therapies for women’s cancers.

Population Health Inv.

$150M

SPAC

JP Morgan

Blank check company targeting a therapeutics business.

Yatsen

$100M

Consumer Staples

Goldman

Produces cosmetics under the brands Perfect Diary, Little Ondine, and Abby’s Choice in China.

Maravai LifeSciences

$100M

Health Care

Morgan Stanley

Provides acid production, safety testing, and protein detection products for biotechs.

Periphas Capital

$300M

SPAC

Evercore ISI

Blank check company formed by Periphas Capital.

EZGO Technologies

$11M

Consumer Discretionary

Chinese e-bicycle producer and lithium battery seller.

NeoGames

$90M

Consumer Discretionary

Stifel

Provides gaming technology and services to lottery operators.

Omnichannel Acquisition

$350M

SPAC

Citi

Blank check company targeting omnichannel consumer and retail businesses.

Breeze Holdings Acq.

$100M

SPAC

I-Bankers

Blank check company targeting the oil and natural gas industries.

Health Assurance Acq.

$500M

SPAC

Morgan Stanley

Blank check company formed by General Catalyst targeting healthcare technology.

Leo Holdings II

$350M

SPAC

Deutsche Bank

Second blank check company formed by Lion Capital executives targeting consumer businesses.

Ondas

$25M

Communication Services

Oppenheimer

Provides a software-defined radio system to create private broadband networks.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 9/17/20, the Renaissance IPO Index was up 71% year-to-date, while the S&P 500 was up 2.5%. Renaissance Capital’s IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Zoom Video (NASDAQ:ZM) and Uber (NYSE:UBER). The Renaissance International IPO Index was up 32.9% year-to-date, while the ACWX was down 6.6%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Meituan-Dianping and SoftBank Corp.

Original Post

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



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