The U.S. initial public offering market is bracing for what would be the busiest week of the year so far — if all 19 deals on the roster are pushed through.
That may not happen, after an eye-popping selloff Monday that sent the Dow Jones Industrial Average
down 900 points amid growing concerns about the fast-spreading delta variant of COVID-19 and tensions between the U.S. and China.
The market was likely also rattled by last week’s performance which saw about half of the 13 companies that listed trade below their issue price, according to Bill Smith, chief executive and co-founder of Renaissance Capital, a provider of institutional research and IPO exchange-traded funds.
“Hard times in IPO boom town,” Smith wrote in commentary, adding that besides the deals that traded down, two others were postponed.
“The reason: poor aftermarket returns from recent IPOs. No one gets a free pass when that number goes negative,” said Smith.
The Renaissance IPO ETF
has fallen 6% in the year to date, underperforming the S&P 500
which has gained about 13%.
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The biggest deal this week is expected to be that of Ryan Specialty Group
an insurance brokerage aiming to raise up to $1.4 billion at a $6.1 billion valuation. The company has applied to list on the New York Stock Exchange under the ticker ‘RYAN.’
“The company assists in the placement of hard-to-place risks for retail insurance brokers, and the sourcing, onboarding, underwriting, and servicing of those hard-to-place risks for insurance carriers,” Smith wrote.
The second biggest deal involves water infrastructure company Core & Main
which is aiming to raise up to $802.7 million at a valuation of $5.2 billion. The company is also planning to list on the NYSE under the ticker “CNM.” Goldman Sachs, Credit Suisse and JP Morgan are lead underwriters in a syndicate of 16 banks.
an Ohio-based human capital management software company, is aiming to raise up to $388.5 million at a $3.6 billion valuation. The stock is expected to list on the Nasdaq under the ticker symbol “PYCR.” There are 14 underwriters on the IPO, led by Goldman Sachs and J.P. Morgan.
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a software company that helps retailers build an e-commerce business, is expected to raise up to $235.9 million at a valuation of $3.2 billion. The Class A shares are expected to list on the NYSE under the ticker symbol VTEX.” J.P. Morgan, Goldman Sachs and BofA Securities are the lead underwriters.
That is followed by Instructure Holdings
an educational company that has developed a learning management system, which is aiming to raise up to $262.5 million at a $2.9 billion valuation. The company has applied to list on NYSE under the ticker ‘INST.’ Morgan Stanley, JP Morgan and Citigroup are lead underwriters in a syndicate of 14 banks.
Other deals of interest include:
• Zevia PBC
a beverage company that makes zero-calorie and zero-sugar beverages with “clean” ingredients. The Encino, Calif.-based company plans to list Class A shares on the New York Stock Exchange under the ticker “ZVIA.”
Zevia expects to offer 14.3 million shares at $13 to $15 each. That would value the company at $544.5 million at the high end of the range. Goldman Sachs & Co. LLC, BofA Securities and Morgan Stanley are the lead underwriters in a syndicate of six banks. The company expects to use the proceeds of the IPO for working capital and other general corporate purposes.
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• Outbrain, a profitable New York-based online content recommendation company, is planning to raise up to $208 million at a possible valuation of up to $1.39 billion. The stock is expected to list on the Nasdaq under the ticker symbol “OB.” Citigroup, Jefferies, Barclays and Evercore ISI lead a group of seven underwriters.
• CS Disco Inc.
a Texas-based provider of legal document review and e-discovery services to law firms, is expected to raise up to $217 million and be valued at up to $1.75 billion, after it raised its proposed price range early Monday. The company has applied to list on NYSE under the ticker ‘LAW.’
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• Xponential Fitness
a boutique fitness franchiser with chains including Club Pilates, Row House, a studio chain for indoor rowing, and Stride, a treadmill-based studio chain, is seeking to raise up to $212.8 million at a $711 million valuation. The company is the biggest boutique fitness franchiser in the U.S. with more than 1,750 studios.
Xpoential’s deal will follow that of the Mark Wahlberg-backed F45 Training Holdings Inc.
which hit the market last week. Both companies are going public after a year in which the health club industry took a beating due to COVID-19.
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The U.S. fitness club industry lost $20.4 billion in 2020 after a year in which the industry generated a record $35 billion in revenue, according to data provided by IHRSA, the Global Health & Fitness Association.
F45 shares were down about 10% Monday at $14.53, below their IPO price of $16.
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