IPO Recap and Outlook for 2015

IPO ETF manager Renaissance Capital reported that 68 IPOs have priced in the U.S. so far this year, down 41% from a year ago. Total proceeds raised through May 22nd equaled $12.2 billion, down almost 48% compared with the same period in 2014. Of the 68 IPOs that have gone off this year, 30 have come from the healthcare sector. Last year’s IPO total came in at $85.2 billion, the highest total in the past ten years. Renaissance Capital does not include “best efforts” or blank check companies in its totals.

All six firms scheduled to price their IPOs last week did so, including a “best efforts” IPO from Code Rebel Corp. (NASDAQ: CDRB) which priced at $5 a share, closed at $15.85 on its first day of trading, and hit a high of almost $38 a share on Thursday. The stock closed the week at $34.65, up nearly 190% since trading began on Tuesday.

E-commerce companies Shopify Inc. (NYSE: SHOP) and Baozun Inc. (NASDAQ: BZUN) had diverging IPOs, with Shopify pricing 31% above the midpoint of its expected range and popped 51% on its first day of trading. Baozun price 23% below its expected midpoint and got a first day pop of just 4%. At the end of the week Shopify’s total return was 67% compared with Baozun’s 11%.

Mortgage services platform provider Black Knight Financial Services Inc. (NYSE: BKFS) returned 16% in its first week as a public company, while Press Ganey Holdings Inc. (NYSE: PGND) returned 10%, and Community Healthcare Trust (NYSE: CHCT) returned 6%.

So far in 2015 firms have filed for 96 IPOs, with May having seen 26 filings so far, the most of any month. Last year 365 companies filed for an IPO.

Two sectors where IPOs have dried up so far this year are energy and technology. In 2014, 55 tech companies completed an IPO; so far this year there have been just 9. The energy sector has performed nearly as poorly in terms of numbers: 30 IPOs in 2014 compared with just 6 this years. That’s less of a surprise given the depressed prices for oil and gas.

But three of the energy IPOs rank as the top three to date in 2015. Tallgrass Energy GP LP (NYSE: TEGP) raised gross proceeds of $1.2 billion on its May 6th IPO, the largest U.S. IPO to date this year. The second largest came in February with the IPO of Columbia Pipeline Partners LP (NYSE: CPPL) which raised $1.08 billion. EQT GP Holdings LP (NYSE: EQGP) raised $621 million on its May 11th IPO.

Two tech firms round out the top five so far in 2015: Inovalon Holdings Inc. (NASDAQ: INOV) raised $600 million and GoDaddy Inc. (NYSE: GDDY) raised $460 million.

There are four relatively small deals in the works for the first week of June. We’ll tell you about those next week.

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